For Better Management, Develop a Good Business Plan

Wednesday, May 4 @ 09:05 AM
Charles Mouse - financial expert

When things are going smoothly and everything in business is fine, and the business is doing good with extra cash that can cover the other business ventures, the management usually relaxes and settles in with the minor gains that they have. Numerous managers believe that business plans are prepared because the financial institution requires it when additional capital is sourced out.   Most often that is the only reason why business plans are written. The real purpose of the business plan is defeated. Business plans are aid that can make business establishments make better, explore new ideas, and target new businesses. This is often overlooked. The significant benefit of a very good plan is not necessarily the plan documentation, but rather, the progression itself and its effect on the management team.  A business plan requires the managers to take an objective, essential look at their activity. This process can change how commerce is perceived, open eyes to new opportunities or focus on the importance of those operations that are not making good.

Bigger institutions often set strategic planning seminars to be able to come up with a desired plan to guide the management the process how to improve the business.  Organizational goals are set that are then broken down into departmental goals that are further translated into goals for the basic unit of the business. The basic units of the business are most often the profit centers that are the lifeblood of the business.

As the source of income for the business, profit centers are organized accordingly according to the particular service or interest of the business. Each business interest is broken down into individualized structure that could cater to the needs of the customers. Oftentimes, these units are very specific to the particular group of people according to their interests, hobbies, current trends, social stature and the amount of profit they can bring into the business. With proper business planning and research these specific clusters will identify and dictate the profit center that a business should invest in. The risk of investment will also define the overall objective of the thrust of the business. Managers may take higher risks for higher profit or may take minimal risks for minimal and safe income.

When the objectives of the business are institutionalized, and the goal is specifically defined, the specific goals and objectives will be cascaded to the basic business unit. Each defined objective will emphasize the service and the margin of profit it will entail for the unit. With formal business plan, details on how to achieve these goals and objective will be laid out. Targets are set for each department, responsibility is delegated or assigned to the most responsible person and implementing departments or units are given full responsibility as well. These will serve as the guiding principles and processes to reach the desired objective. The business plan will provide each business manager a common reference point in implementing the programs and the thrusts of the institution. It will also be easier to monitor a profit center as the company grows. Performance will be measured by the indicators set with the targets so if these are not met, corrective measures will be properly implemented.

Business plan preparation usually takes time. Most of businesses that are new to this hire consultants or a third party team to mediate during the process. A good team leader should also be selected to keep an objective mind to focus on the main goals of the business. There will be arguments and disputes who will get the biggest budget and whose department budget will be cut. This process however, will eliminate confusion and will set records straight towards coming up a very good business plan.

The involvement of the managers in the business planning process will provide them the ownership of the plan. It will give the feeling that they own the plan and the responsibility of the implementation rest on their hands. They will give full support in the steps towards the institutionalization of the business plans. Appropriate action towards achieving set targets will be easier because it is their plan as well.

One of the focal point in business planning is on how to improve and expand the business. It is in this venue where business expansion is introduced, new products to consider, new service to be introduced, whether to expand locally or go international or global. This is also the venue to set higher goals and targets or to expand to new customers. All these things are considered and painstakingly measured to ensure better and improved business. This is in the business plan.

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