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Top 3 Reasons Why Business Planning Is Important

April 25, 2012 | Comments: 0 | Views: 109

It is about anticipating what will happen. It is about having a critical mind in assessing the current environment. It is about setting goals.

Every entrepreneur needs to do all these if his or her business must succeed. Planning is imperative for all business enterprises. The saying, "If you fail to plan, you plan to fail," appropriately captures the compelling necessity of planning. Certainly, no one would put up capital and start a business only to fail.

Why must businesses plan then? This question truly baffles those who are not used to planning. But here three important reasons why.

First, it provides a game plan. Even a basketball team who goes to the court, play with their opponents with the goal to win the game. Planning works the same way for business. An entrepreneur does not engage in business without a clear direction. In fact, the business plan bears it all. It outlines what the entrepreneur must have to do.

It must be noted that before one can come up with plans in terms of strategies and timelines, one must be fully aware of the current realities the business finds itself in. The question, "Where are we now?" must be answered. Once this is done, it is only then that one can come up with relevant and appropriate plans.

Second, it serves as a metric for success. A plan essentially contains goals and objectives that the business hopes to achieve. These goals and objectives shall serve as a standard by which performance must be evaluated against such that, if you achieve or better yet, surpass the established targets, then the business shall have succeeded. Otherwise, it has failed. In other words, it serves as benchmarks or key success indicators.

Since, goals and objectives are vital in the definition of business success, a word of caution is therefore necessary. Objectives must be clear, measurable, realistic, attainable and time-bound. If we are to compare actual performance with it, then it has to be concretely quantifiable.

Third, it helps the business allocate its limited resources. Since a plan establishes the business's directions and thrusts, it easily helps us determine which strategies and programs should be prioritized in terms of financial allocations as well as human resource allocations. One must understand that due to the dynamism of the business environment, an organization needs to respond to any change in the current picture. These developments and changes may pertain to competition, demographics, technology advancement, legal environment, social, or cultural. Most often, responses to the environment entails cost and other resource spending.

Entrepreneurs practicing planning may have other equally important reasons for doing so. But it is clear and apparent that if a business fails to plan, it would be like a ship sailing to a destination without a map. It would have a difficult time adjusting to changes in the business environment. It would have a hard time sensing any trends and opportunities. It would have rough time for being always on the defensive stance against competitors' who plan. Planning is therefore a very important exercise.

Moira Chin is a freelance small and medium enterprise consultant specializing in strategic planning, organizational development, marketing and market research

She strongly advocates that buying and managing an expensive office for your business to strengthen your brand is totally unnecessary. White Space is an innovative concept of business space designed to boost your company's professional presence with state-of-the-art office facilities. Click here to make it your office or your virtual office today.

Source: EzineArticles
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