Business planning takes place when the key stakeholders in a business sit down and flesh out all the goals, strategies, and actions that they envision taking to ensure the business’s survival, prosperity, and growth.

Business plan:

A business plan is a written description of your business’s future, a document that tells what you plan to do and how you plan to do it. If you jot down a paragraph on the back of an envelope describing your business strategy, you’ve written a plan, or at least the germ of one.

Business plans are inherently strategic. You start here, today, with certain resources and abilities. And you want to get to there, a point in the future (usually three to five years out), at which time your business will have a different set of resources and abilities as well as greater profitability and increased assets. Your plan shows how you will get from here to there.

How planning works?

Every new business needs a business plan-a blueprint of how you will develop your new business, backed by research, that demonstrates how the business idea is viable. Let’s see how the planning works,

A)Facilitates management by objectives:

1. Planning begins with determination of objectives.
2. It highlights the purposes for various activities.
3. In fact, it makes objectives more clear and specific.
4. It helps in focusing the attention of employees on the objectives or goals of enterprise.
5. Without planning an organization has no guide.
6. It compels manager to prepare a blue-print of the courses of action to be followed for accomplishment of objectives.
7. Therefore, planning brings order and rationality into the organization.

B)Minimizes uncertainties:

1. Business is full of uncertainties.
2. There are risks of various types due to uncertainties.
3. Planning helps in reducing uncertainties of future as it involves anticipation of future events.
4. Although future cannot be predicted with cent percent accuracy but planning helps management to anticipate future and prepare for risks by necessary provisions to meet unexpected turn of events.
5. Therefore with the help of planning, uncertainties can be forecasted which helps in preparing standbys as a result, uncertainties are minimized to a great extent.

C)Facilitates co–ordination:

1. Planning revolves around organizational goals.
2. All activities are directed towards common goals.
3. There is an integrated effort throughout the enterprise in various departments and groups.
4. Planning avoids duplication of efforts. In other words, it leads to better co-ordination.
5. It helps in finding out problems of work performance and aims at rectifying the same.

D)Improves employee’s moral:

1. Planning creates an atmosphere of order and discipline in organization.
2. Employees know in advance what is expected of them and therefore conformity can be achieved easily.This encourages employees to show their best and also earn reward for the same.
3. Planning creates a healthy attitude towards work environment which helps in boosting employees moral and efficiency.

E)Helps in achieving economies:

1. Effective planning secures economy since it leads to orderly allocation of resources to various operations.
2. It also facilitates optimum utilization of resources which brings economy in operations.
3. It also avoids wastage of resources by selecting most appropriate use that will contribute to the objective of enterprise. For example, raw materials can be purchased in bulk and transportation cost can be minimized. At the same time it ensures regular supply for the production department, that is, overall efficiency.

F)Facilitates controlling:

1. Planning facilitates existence of certain planned goals and standard of performance.
2. It provides basis of controlling.
3. We cannot think of an effective system of controlling without existence of well thought out plans.
4. Planning provides pre-determined goals.
5. In fact, planning and controlling are the two sides of a same coin. If planning is root, controlling is the fruit.

G)Provides competitive edge:

1. Planning provides competitive edge to the enterprise over the others which do not have effective planning. This is because of the fact that planning may involve changing in work methods, quality, quantity designs, extension of work, redefining of goals, etc.
2. With the help of forecasting not only the enterprise secures its future but at the same time it is able to estimate the future motives of it’s competitor which helps in facing future challenges.
3. Therefore, planning leads to best utilization of possible resources, improves quality of production and thus improves the competitive strength of the enterprise.

H)Encourages innovations:

1. In the process of planning, managers have the opportunities of suggesting ways and means of improving performance.
2. Planning is basically a decision making function which involves creative thinking and imagination that ultimately leads to innovation of methods and operations for growth and prosperity of the enterprise.