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What is Business Planning?

Many entrepreneurs rely on social media and networking to assess trends and identify needs and opportunities.
Companies sometimes hire consultants for business planning.
Business planning may be advantageous in the event of acquisitions.
Business planning is necessary for the entrepreneur who is starting a new business.
Article Details
  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 07 October 2014
  • Copyright Protected:
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Business planning is a process that involves the creation of a mission or goal for a company, as well as defining the strategies that will be used to meet those goals or mission. The process can be very broad, encompassing each aspect of the operation, or be focused on particular functions within the overall corporate structure. Often, it involves the use of resources within the company as well as engaging the services of consultants to assist in designing and implementing the plan.

There are several points in the life of a business when the process of business planning is an essential task. Starting up a new company involves performing at least rudimentary planning to address such factors as defining the goals of the company, obtaining operating licenses, incorporating the business if appropriate, and defining the basic structure for the new business. Along with these factors, business planning will also address the issue of what goods and services to offer and how to go about producing those core products.

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A second stage when business planning comes into play is when an existing company wishes to expand operations. This will determine what is needed in order to manage the expansion process, especially in regards to financing new facilities, expanding sales and marketing efforts, or designing a new communications infrastructure to meet the needs of the expansion. It is not unusual for consultants to be called during this type of planning, as the process often involves a drastic overhaul of the company’s operations.

Business planning may also be advantageous in the event of acquisitions. For example, Company A decides to buy Company B and integrate their operations into the overall company structure. This will often mean developing a business plan that addresses issues such as negotiating new service contracts with vendors to include the acquired company, combining some functions or physical locations in order to maximize efficiency, and rearranging departmental functions and the personnel who will staff those departments. As with expansion, it is not unusual to call in consultants that specialize in various areas to help give the business planning a logical flow and develop a plan for completing the merger of facilities and other assets in a timely manner.

In general, any type of business plan requires investigation, careful evaluation of all known factors, and projecting potential results of different options that are open to the company. This open-ended process can take on a number of forms, some of them relatively simplistic, while others are extremely detailed and complicated. However, the basic task of business planning is necessary for the entrepreneur starting a new business, as well as the established company that wishes to expand through the launch of new products or by acquisition of competitors.

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Discuss this Article

anon176019
Post 4

The tips i have drawn from your above summary on how to plan the business are of great importance in my business life. keep it up!

oasis11
Post 3

Subway11-I know that some people use business planning software to help them determine the cost of doing business and when their company is likely to turn a profit.

Starting a new business is exciting, but business strategic planning is essential to its success. This is why 90% of businesses fail within the first three years.

Many people fail to take planning into consideration and may not have the capital to sustain the business.

This is a common mistake and the reason why many businesses fail. People get so excited about the idea of the business that they forget to build the foundation for the business first.

Also, it is important that if you want to open a business in a certain industry, you should try working a job in that industry for about six months to see if that is something that you will enjoy.

This experience will also offer you valuable industry experience that you can expand upon when you open your own business. This will make strategic business planning easier especially with the use of business plan software.

subway11
Post 2

Cafe41- I just wanted to say that there is an organization called SCORE that offers help on small business planning.

These are retired business executives and small business owners that offer business financial planning assistance free of charge.

SCORE is part of a nonprofit organization that helps would be business owner’s work with experienced and established business owners in order to encourage them to create new businesses. These counselors are paired up with new business owners of similar industries in order to make the help more beneficial.

This really helps the new business owner avoid common pitfalls of their chosen industry. The organization also offers bimonthly meetings and weekly workshops.

cafe41
Post 1

It is important to write a business plan when starting a business. A small business plan involves the types of goods and services that a business will sell along with the target market of this business.

A business plan example will also include the break even analysis and the point at which profitability will occur.

There is also a set of fixed expenditures along with variable expenses that have to be accounted for. In addition, a cash flow analysis has to also be considered as well as competitive information regarding the company’s competitors.

This may include pricing information as well as product or service offerings and locations in which the competitors do business. An appropriate adverting mix is also required along with possible staffing plans. All of this small business planning is required in order to give the company a chance at success.

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