3. Why Is It So Important For Business?

3. Why is it so important for business?

3.1 Starting up the business.

The importance of business planning is that it helps an organisation to summarise all aspects of the enterprise. The existence of business plan overviews and summarises the following points about the company:
• Where it has come from.
• Where it is now.
• Where it is going in the future.
• How it intends to get there.
• How much money it needs to fulfil its plans.
• What makes it likely to succeed.
• What threats or disadvantages must be overcome on the way. (O'Kane, 2010)
Planning is a core activity for business and is a process by which an organisation can set goals and then select the means to achieve these objectives. Without plans, a company will be unable to co-ordinate
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Eisenhower, former Us President
The business plan process also helps to gain more control over both short-term and long-term progress of the business. While developing a business plan, it increases an understanding of the many forces that have an impact on the enterprise’s success, which in turn will give a stronger sense of control. (Abrams, 2013)
All the research into success and failure factors of business show that one of the most important success factors is business planning- over 70% of failures are due to bad planning. (Immink & O'Kane, 2009)
A Business plan is essentially a map to the targeted destination. Business plan gets company from starting point to desired goals: from the basic business concept to a healthy, successful business. In the rush of daily business, it is very easy to lose sight of the objectives and goals, a business plan can help to keep you focused. A business plan can also serve to help others to understand your vision, including suppliers, customers, employees, etc.
In addition, a business plan is a tool for communication. Banks and investors will look to your plan for evidence that your company can succeed. Your partners and employees will look at it as a blueprint for the future, bringing together disparate elements such as marketing, sales and operations into one document. (Intuit,
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Appendix A at the end of the report attached.
“The discipline you impose on yourself by writing things down is the first step towards getting them done” Lee Iacocca
3.3 Secondary good reasons for business planning.

There are so many other good reasons to create a business plan that are not so obvious.
• Decide whether or not to rent new space. Maybe the growth prospects and plans justify taking on the increased fixed charge.
• Hire new people. This is another new obligation that increases the risk. The rationale for hiring should be in the business plan.
• Valuation of the business for formal transactions related to divorce, legacy, and estate planning and tax issues. Valuation is the term for establishing how much does the business worth.
• Selling the business. Usually the business plan is a very important part of selling the business. Help buyers understand what you have, what it's worth and why they want it. (Berry, n.d.)
“Whether you're just starting out, growing your business or seeking outside help, a well-thought-out business plan is the vehicle you need to get you there”. Tim Berry

Appendix A.

Business planning in the different stages of a business

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