Introduction:
Business planning is usually done when a business plan is needed for financing purposes or to use it as a guide to running or developing a business (as a start-up or future). In this planning process, many important features of the business need to be considered and balanced. Various options, problems and risks associated with these features will be considered.
Entrepreneurs often assume that one variable is linearly related to another (for example, spending $ x on marketing will generate $ y of sales revenue). However, business is rarely that simple. Many multifaceted relationships tend to have different characteristics. Sales, for example, will also be affected by product quality, price, and so on. On the other hand, sales will have an impact on future expansion. An integrated business planning process is needed to address this trend.
Key Business Planning Issues
Every business is different,’s potential issues do not necessarily arise in the other. However, it is important for business planners to make sure that they are analyzing and planning all the relevant features of their particular business. This usually includes issues that are highlighted below.
- Business – It is possible to ensure that the opportunities, the business concept, the products, the services, the strategies, as well as the industry in which they operate, are sound.
- Marketing – Marketing strategy should be considered. This includes aspects such as pricing and promotion.
- Market research – This is a crucial issue that is often overlooked. You can know, understand customers, market size, trends, who the competitor is.
- Development – All issues related to the development of new products, services, markets and opportunities need to be planned.
- Operations – What to do, where և how to take into account all aspects.
- Team – The management team must meet the requirements of the business. It would be better to establish what skills / jobs are needed and then connect people with them. Where skills are lacking, training programs can be implemented and new people can be hired. The composition of the board of directors, management teams, etc., should be planned.
- Finance – Finances are the ultimate measure of business success, but it can not stand on its own. Potential financial problems usually involve investment, financing և dividend decisions և policy. It is also very possible to plan the turnover (sales), the margin of gross profit – the control of expenses (expenses). The relationship between these issues (financial ratios) requires further planning to determine if the business will be profitable, liquid and solvent. Return on Investment (ROI) կայուն Sustainable business growth, for example, must take into account specific aspects.
- Risk Management – The various risks that arise must be identified, analyzed, and secured. Fatal shortcomings must be eliminated. Operational and financial risks can often be hedged. This will lead to certain costs և strategies such as production in different countries ք trading futures in different currencies և trading options.
Detailed business planning complexity
A brief overview of important issues to consider shows the complexity involved in business planning. If we just look at the financial issues, we will see that the price will affect the sale (turnover). The lower the price, the more physical the volume will usually be (unless the image requires a higher price). Turnover և total profit, however, do not have to be higher. There is usually a good balance between price, sales volume, turnover and “profit”.
To complicate matters further, turnover, costs and profits, as well as schedules, directly affect a company’s cash flow (a very important issue). This whole aspect is further complicated by investment (capital expenditures), financing (equity or debt?) Dividend decisions. Spending too much on the plant, owing too much և paying too much to shareholders will have a negative impact on the company’s sustainable business growth, which will reduce achievable goals. This scenario shows only some of the different aspects that need to be balanced in the broader financial sector.
Unfortunately, the complexity of the example does not stop with finances. Finances affect many other important aspects of business. On the other hand, many other important aspects affect finances as well as each other.
Financial decisions, for example, will have a direct impact on business growth (for example, geographic expansion և new product development), marketing costs և employment և development. All these issues will have such an impact on each other’s financial problems.
Integrative business planning approach
The general trend in business planning will be to solve each issue on your own, then simply adding the parts together and re-planning if something does not make sense. Business planning often starts with a certain amount of projected turnover և profit. Then everything goes backwards.
A much better option would be to have a business integration planning approach. To do this, you need the following steps:
- Identify all the potential features of your business.
- Determine the relationship between these salient features.
- Try to solve each trait, taking into account the victims and the consequences, taking into account other traits.
- Use “what-if” questions to create better complete solutions.
Summary:
The idea of business planning is not to optimize one side of the business, to ignore or ignore some of the others. The various relationships (causes և consequences) must be ensured through integration. An obvious trait or relationship that is overlooked can jeopardize the entire business.
Copyright © 2008 By Wim Venter. ALL RIGHTS ARE PROTECTED.