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

BTEC National Diploma In Business Studies

Unit 1: Introduction To Business

Task Seven

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 ...

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Within business planning, the business overlooks at various sections and areas about the business, When planning the business begins with a statement outlining the purpose and goals of the business and it goes on to show how the business will realise these goals it will include a detailed marketing strategy, when planning

Managers also calculate a break-even analysis, and profit and loss projection and a cash flow analysis designed to show if the business has enough money or has developed as expected. Other areas include analysing the business and its operating environment, defining its competitive advantage, positioning the business in its market, and setting appropriate financial, personnel and operational plans which help the business significantly to grow and survive as these aspects are critical in today’s business world.

There are many specific reasons for business planning:

Deciding objectives
Asses market demand
Plan resource requirements
Assess finance requirements
Analyse likely future changes
Summarise likelihood of success
Set targets
Guide day to day activates
Describe situation of the business
Check against targets
Decide changes
The plan takes many information from many sources ideas
Industrial market research
Customer market research
Financial calculations

Above I talked about the financial calculation section that would be included as part of the business planning, making financial projections and calculations are considered very important within the business planning process, this aspect significantly contributes to the survival and growth of the business. For example predicting and planning business finances can show potential investors that the business idea will fly. The action of developing financial projections when business planning, including an estimate of costs, a break-even analysis, a profit-and-loss forecast, and a cash flow projection, will help decide if the business needs to rethink some of its key ideas.

For example when the business wants to grow and survive they will first look at there financial calculations to see where the business is in terms of finance and then they will decide and then make other calculations to see how much money will be needed for the new project or it could help them to develop better services if finances were not enough, and then this will help them eventually grow. By using calculations it will help the business in summery to see whether the business is to grow or survive and most importantly if the business will be profitable to invest in the business.

In summery business planning helps significantly and contributes massively to help the business to survive and grow as it helps the business to:

Focus businesses attention on longer-term business goals and direction
Identify any areas on internal strengths and weaknesses
Identify possible threats and constraints on the business
Identify, assess business opportunities
It helps the business to compete in the market place (through an analysis of what the business competition lacks)
Anticipating potential problems so the business can solve them before they become disasters.

A businesses survival can therefore be threatened by anything that might reduce its income. If sales revenue falls, because of competition or a move by consumers away from a brand, profit will also fall. This is why planning helps as it helps to aid in keeping there eye on their market, it also helps to review strengths and weaknesses opportunities and threats for the organisation in order to grow and survive.

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