Business planning in the enterprise - basic rules and risks

Business is a lucrative business if you approach it responsibly. Of great importance is business planning, through which you can calculate possible risks, think through the actions in advance and understand the possible results.

Why do business planning?

To see a holistic picture of business, it is necessary to build a plan. It is a kind of forecast for the future to assess possible prospects. There are specific tasks of business planning.

1. Determine in what directions the firm can develop, and what place in the target markets it will occupy.
2. Formulate long-term and short-term goals, and also develop a strategy and tactics to achieve them.
3. Select specific people responsible for each point of implementation of business planning.
4. Present basic indicators of goods and services that will be offered in the market to consumers.
5. Conduct an assessment of production and trade costs for their creation and implementation.
6. To find out how to properly motivate employees so that they clearly fulfill the requirements for the implementation of the planned plans.
7. Make an assessment of the financial position of the firm.

The main reasons for business planning

Many beginning entrepreneurs do not like to plan anything and are guided only by their intuition. Such a strategy does not always work, so business planning at the enterprise has its important reasons.

1. If you need money for development and you have to look for investors, the first thing they will look at is a detailed business plan that will help you understand whether investments will be profitable.
2. Planning helps to identify goals that will need to be sought in the development of the enterprise.
3. The development of business planning can be called a kind of assistant to solve pressing problems. The plan describes the methods of selection of personnel, rules for concluding transactions and other nuances of the policy of the organization.
4. Foreseeing different situations, therefore, when developing a plan, one should consider not only an optimistic scenario.
5. Carry out analysis, research and gain knowledge. This reason is due to the fact that during the development of the plan it will be necessary to study the diaphragm of consumers, competitors and other important aspects.

The essence of business planning

A well-designed plan helps you to think through a strategy and understand how realistic it is to implement existing ideas. With it, you can avoid mistakes that often lead to failure. There are basic functions of business planning:

1. Stimulation and motivation of the planned transactions and other actions.
2. Forecasting the desired state of the business, taking into account the set of different factors.
3. Optimization of the enterprise in a specific socio-economic environment.
4. Coordination of all structural divisions of the firm to obtain a common result.
5. Business planning contributes to the implementation of safe management, as there will be awareness of the possible risks.
6. Helps to streamline the work and monitor the implementation of the plan in time to identify errors and correct them.

Types of business planning

There are several classifications that differ by several features. If you focus on the flexibility of plans, you can distinguish two options: directive (when there are clearly defined indicators) and indicative (no framework, and there is the possibility of maneuvering) planning. In another classification, the following types are distinguished:

1. Operational or short-term planning is aimed at implementing tactical plans. Business, as an object of planning, focuses on the volume of production and sales, quality control, personnel and so on.
2. Tactical or medium-term planning implies choosing the best means for implementing the strategy. It is important to ensure the proportional development of all organizational units.
3. Strategic business planning involves the creation of a set of long-term solutions that are developed within the framework of the set goals.

How to write a business plan?

There are many instructions and tips on how to draw up a plan, which is a working document. It can be periodically reviewed and edited. Use some useful tips how to create a business plan:

1. Write a description of the project, where you need to explain the strategy, outline the market and capital, and even advantages over competitors.
2. It is important to indicate the name of the company that has licenses, legal structure and form of ownership. The preparation of a business plan includes a brief description of the product or services that are planned to be implemented.
3. Pay attention in your plan to describing the goods and services, indicating their benefits, the benefits to which consumers are calculated and so on.
4. Business planning should take into account competitors and it is recommended to specify about five such enterprises. It is important to note having advantages over them.
5. Be sure to make a financial calculation and indicate the income and expenses for the first year, and quarterly calculations for two years in advance.

Risks in business planning

Doing business has a constant connection with risks, which are important to take into account, so that the activity does not prove to be a failure.

1. Sovereign - related to the state of the state. Business reflects crises, wars, disasters and so on.
2. Production - is due to industry specific business features.
3. Currency - is associated with a change in the exchange rate.
4. Financial - business planning in the organization should consider the appropriateness of attracting certain sources of investment.
5. Project - is related to the correctness of the business plan.
6. Interest - losses due to changes in interest rates.
7. Transactional - is associated with the risk of loss in a particular operation.

Errors in business planning

Many beginning entrepreneurs make mistakes, which are easy to avoid if one knows in which direction to work.

1. Ignorance of the target audience and its needs.
2. Insufficient information about the market or use of unrealistic data. The concept of business planning involves a thorough analysis of the market, a survey of future buyers and analysis of competitors. The information from the Internet can be erroneous.
3. Establish unrealistic deadlines. Experts recommend that all terms be multiplied by three.
4. Lack of information about people who will implement the project.
5. Many do not take into account competitors in the market, believe me, they are even if the project is innovative.
6. The risks of the project were not taken into account and advertisement was not considered.

Business Planning Books

There are many different literature that helps to understand the essence of planning and forecasting your own business. If you are interested in the best books on business planning, then you can choose the following publications:

1. "Business plan for 100%", R. Abrams . The author is an entrepreneur and talks about his invaluable experience, therefore the principles proposed by them are verified in practice.
2. "Strategy of a clean sheet", M. Rozin . The information offered in this book teaches how to do business properly. The author offers a description of the actions of two types of entrepreneurs who make mistakes, but they have merit.