Importance of Business Planning

Importance of Business Planning

By Dominic Shum

Business planning is many things to various people and although elements of business planning appears in most management literature it has rarely been accorded the status of a stand alone management field.

Some of the reasons why people do business planning:-

  • Trying to get a bank loan to start a business or a project
  • Trying to impress an investor
  • Preparation for listing the company in the stock market.
  • Planning for the budgets of the next financial year
  • Taking stock of the company’s financial and feasibility status
  • Strategic planning for the future

A company can actually do business planning for more than one of the reasons above over a period of time. However, the process is more or less the same which requires the following steps.Below is the my own Business Planning process:-

  • Setting broad missions or goals
  • Analyzing information – Study market
  • Setting objectives and targets
  • Deciding on strategies
  • Commandeering resources
  • Implementing the strategies
  • Reporting
  • Monitoring the progress

Take corrective actionsWhile the above is a bit more harder to remember than the often used “PDCA” cycle used in taking action or solving problems it provides a better understanding of what real businesses do. We advocate the above process in order to ensure that no issues are left out in the process and makes the plans awry. For example; in our model the act of reporting is included. Although it make sense and is logical, most models in planning ignores this with the result that most companies fail to emphasize in management accounting. It is sad to see that a lot of companies pay top money to hire accountants who are actually not contributing any effort to improving business decisions but just to produce reports to adhere to accounting regulations and tax requirements.

Oh, by the way, before business planning for any projects or venture, please study the market first or do a feasibility study… Its priceless. 

The author is the Principal Consultant of DRC Services which specializes in management consultancy and training. Mr. Dominic hum has many years of senior experiences in financial management and business planning. He has held positions such as director, financial controller, group finance manager and regional business planning manager for multinationals and listed companies. Dominic can be contacted at dominicshum@outlook.com for assignments on project basis in the field of business planning, budgeting, cost control, management restructuring etc. The article above is an independent work submitted by the above author and does not reflect or represent views of the management, owners and agents of this website.

 

This article appeared in another blog by Dominic Shum  on the

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