Explain the importance of business planning to the survival and growth Essay

Explain the importance of business planning to the survival and growth Essay

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Explain the importance of business planning to the survival and growth
of organisations.

A business plan should always for a business start up, the use of the
business plan should not stop there, and businesses should be planning
constantly in order to run their business effectively and efficiently.
Businesses have to think about how they are going to plan for survival
or growth, therefore they need to do business planning, to help the
business survive and to grow. Business planning means the stages the
business would need to build up the business. Business planning is a
written document which is used by various many types of people such as
financial advisors such as banks, etc, it shows that the business has
taken the time and discipline to think about where the business is and
where the business wants to go. This is called a Business Plan.

Business planning is essentially about taking a more in depth approach
to thinking strategically about the future of the business whilst
taking the businesses present situation into account, when planning
Businesses think about two basic goals, it would be the description of
the over view of the business idea and provide financial data, to show
that the business is making good money for future developments, this
record can be used in future to show financial institutions for
example: if the business needs money for a new project in order to
grow the business and goes to a bank for some finance, it means if the
business can show that the business is doing well then the business
will be eligible for this finance, it essentially allows the business
to asses the businesses current situation so that they can plan for
the future or make predictions as to what might happen, etc.

Many Businesses invest in the time and energy into business planning
for example by planning for a business it can save a lot of money.
Should plans go wrong, where if it were planned business would have a
back up plan to correct this situation, it automatically saves money
and time. The most common reason is to obtain financial support from
lenders to operate or expand the business for example in other cases
where a business might be experiencing trading difficulties, business
planning is a well process for any business undergoing significant
changes for example if company wants to develop new products, new

... middle of paper ...

...prepared, the profit and
loss and cash flow forecasts, These 2 documents help the business
significantly and help the business to make decisions in order to grow
and to survive. If the business needs to borrow money, and as a result
will have a debt to service, the Profit and Loss forecast will show
whether the business can afford to do this. If, as with the majority
of start-ups, the business will run at a loss for a period of time,
the P&L forecast will also indicate how long this is likely to be
(based upon achieving the stated sales expectations) and at what point
in its development the business will breakeven. Having drawn this up,
if a P&L forecast shows that the new business is not likely to
breakeven until month 20,

Then at least the business will be in informed of there position and
will judge the risk of committing the business life’s savings to the

Having prepared a business plan, which includes customer and market
research, a sales forecast, a promotional strategy, a breakeven
analysis and budgets and financial forecasts, there should then be
indications as to how viable the business will be, and the likely
returns on any investment made.

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