BUSINESS PLANNING & BUSINESS PLANS

The three principal functions or a business owner/manager are planning, directing and controlling the activities of his or her employees. It is apparent, however, that most business owners do not spend a large percentage of their time planning. They find that the day-to-day demands of their business leaves them little time to plan. Some business owners try to manage by dealing with problems as they come along. As a result much of their time is spent "putting out fires." Fortunately, most business owners realize that they must anticipate problems and opportunities in order to deal with them effectively.

Business owners who do take the time to plan will find that many benefits will come out of the planning process. Lee, Sperling, Hisamune works with business owners in this process of looking ahead. Looking ahead helps guard against being caught unprepared by significant external changes, which have the potential to disrupt operations. Planning forces business owners to analyze their current activities critically and to find new and better ways of doing things. Daily decisions made within the framework of a plan are easier to make and are more consistent. Moreover, planning improves managerial control; it enables business owners to monitor actual results against planned performance and to locate troublesome areas requiring immediate attention. Business owners who plan effectively will improve performance in their business and will be better prepared to take on the increased responsibilities of additional business.

Planning consists of choosing a course of action for the future from among many alternatives. Using this definition, we can see that business planning includes many different kinds of planning activities. They may simply be the shorter "tactical" plan, all the way to the more formal "strategic" plan - and everything else in between that constitutes the proper managing of a business. Regardless of which road your business is on at any one time - a defined plan of action is necessary. By committing it to paper, and resolving to be flexible in its execution, your business will be on its way to greater productivity and a more positive bottom line.

The term business plan means a written document that spells out, in detail, where a company's current business is and, more important, where It is headed. The business plan usually consists of two parts: the strategic, or long range plan, and the annual business plan. The strategic plan usually covers a time span of more than one year (usually five years). It establishes broad goals for the business in the areas of products, markets, organization, growth, profits, return on investment, and capital investment. It also sets strategies for achieving these goals. The annual business plan, sometimes called the budget or annual profit plan, is set within the framework of the strategic plan and is a detailed plan of action for the next year. It specifically identifies what management would like to do and how it plans to accomplish its objectives.

The annual business plan can he divided into two parts: the operating plan and the financial plan. The operating plan, as the name suggests, is a plan for operations of the business and includes action plans for each functional area. It also includes budgets for revenues, costs, and any resources to support the plan. The financial plan, on the other hand, shows how much cash the business plans to use and how It will finance Its cash requirements.

The preparation of an effective business plan takes considerable time, effort and resources away from business activities. But, given the benefits derived from a properly prepared business plan, which aids in the every day planning of your company, one can readily see why you should consider business plans and planning as a necessary tool for greater company success and increased earnings.

What benefits should you expect to gain from devoting time to planning? Efficiency and effectiveness, organizational coordination, an education to familiarize oneself with all areas of his or her business, a framework against which all business decisions should be made, motivation for continued contributions and business development, and an effective standard for measuring performance.

Lee, Sperling, Hisamune
550 North Brand Boulevard, Suite 525
Glendale, California 91203
Phone: (818) 507-6645 - Fax: (818) 507-7891
Email: lsh@leesperling.com