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Home Business

The essence of business planning and the purpose of a business plan

by Rio
2 months ago
in Business
0
The essence of business planning and the purpose of a business plan

A business plan is a carefully prepared planning document that discloses all aspects of any commercial project to be started. It allows you to predict measures for the implementation of a new idea, determine the necessary financial support and obtain a certain profit. In practice, it can be considered a form of expert evaluation of the feasibility and effectiveness of the implementation of this or that business idea.

A business plan is a document that contains a system of measures and actions linked in time and space and coordinated with the purpose and resources, aimed at obtaining the maximum profit as a result of the implementation of a business project (agreement).

Business planning includes three stages:

  1. preparatory period;
  2. development of a business plan;
  3. presentation of the business plan.

Drawing up a business plan is preceded by defining the goals of one’s own business in general and the business plan in particular.

The main internal purpose of the business plan is to be the basis of business management. Specific goals reveal the content and features of planned activities, the features of the enterprise itself, and the specifics of its activities.

A business plan allows you to solve a number of tasks, the main ones of which are:

1) substantiation of the economic feasibility of the directions of development under

businesses;

2) calculation of the expected financial results of the company’s activities, primarily sales volumes and profits;

3) determination of sources of funding for the chosen strategy, roseville seo, i.e. methods of concentration of financial resources;

4) selection of employees capable of implementing this plan.

Each task of the plan can be solved only in connection with others. The center of the business plan is the concentration of financial resources. It is the business plan that acts as an important means of increasing the capital of the enterprise. The process of drawing up a plan allows you to deeply analyze the started business in all its details. The business plan is the basis of the business proposal in negotiations with future partners, it plays an important role in the recruitment of the main personnel of the enterprise.

Thus, the business plan, first of all, can be used to develop a business concept, to work out the strategy in detail, to prevent mistakes through a detailed analysis of the marketing, finances, and production activities of the enterprise.

Secondly, a business plan is a tool with which a business entity can assess the actual results of its activities for a certain period.

Thirdly, the business plan is a means of attracting funds.

Enterprises that have already formed have certain advantages when developing a business plan compared to start-up enterprises. The numbers they use for calculations are reliably based on the results of their activities, their plans for the future stem from their previous strategy, based on the successes of the enterprise, the experience gained from their mistakes.

A number of significant obstacles appear on the way to creating any case, each of which, in the absence of the necessary approach, can cause a problem situation to arise. These include management organization, capital accumulation, product development and marketing, maintaining the required level of gross profit and protecting the business from unwanted influence. Statistics show that 75% of all new business ventures are unsuccessful in the first years [8].

In the event of any difficulties, the entrepreneur must investigate the state of the business and identify possible obstacles. Each time, by identifying and solving a certain problem, the enterprise thereby frees itself from one more obstacle that could lead to failure, and thus increases its chances of success.

Many of the problems can be solved by constantly refining the business plan in order to adapt it to changing conditions. This will make it possible to use the business plan as a real criterion for evaluating the actual results of the enterprise.

Last year’s business plan can show which of the company’s strategies were effective and which were not, and how effective this or that method of its implementation was.

When studying the actual results of work compared to the business plan, positive and negative sides of the organization are revealed, which can be used to eliminate deviations between planned and actual indicators.

The financial section of the preliminary business plan can be used as a means of objective observation of business development. Financial forecasts included in the plan form the basis of the enterprise’s budget. Deviations from the calculations are found in the articles, where either the ideas about the necessary resources were wrong, or the control during the execution of the plan was insufficient. So, in addition to the management function of the business plan, it can be used as a monitoring tool.

A business plan can help attract investors and creditors. Before risking their capital, investors should make sure of the reliability of the project development and have an idea of ​​its effectiveness. They should study the business plan before considering the possibility of capital investment.

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