Cash Flows From Operating Activities Balance Sheet Or Income Statement Business Plan – Purpose and Objectives

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Business Plan – Purpose and Objectives

A detailed description of a new or existing business, including the company’s product or service, marketing plan, financial statements and projections, and management principles, require the execution of the plan. A document that sets out the expected course of business operations over a period of time usually includes a detailed list and analysis of risks and uncertainties. For small businesses, they should examine the proposed products, market, industry, management policies, marketing policies, production needs, and financial needs. It is often used as a prospectus for potential investors and lenders.

Think of it as a production line. What is in the beginning are raw materials and unfinished assemblies. Here are the raw materials:

– Talent and initiative of employees

-Capital -Market position

– the creditworthiness of the company

– Profitability of the business

-Assessment of changes in the market.

It should have four main aspects:

– His contribution to the purpose and goals

– Her primacy among the manager’s tasks

– His penetration

– Effectiveness of emerging plans.

Contribution of planning to purpose and objectives: Each plan and all its supporting plans must contribute to the achievement of the purpose and objectives of the enterprise.

The Primacy of Planning A manager must plan in such a way as to lead to appropriate organization, staffing, leadership, and control that support the achievement of the company’s goals. Planning and control are inseparable. Any attempt at control without a plan is pointless because people can’t tell if they’re going where they want to go. The plans thus provide control standards.

Prevalence of Planning: Planning is a function of all managers that varies according to the authority of each manager and the nature of policies and plans assigned by superiors. If managers are not allowed some degree of planning discretion and responsibility, they are not real managers.

Effectiveness of plans: The effectiveness of a plan refers to its contribution to the purpose and objectives. A plan is effective if it achieves its purpose at a reasonable cost, when the cost is measured not only in terms of time, money or production, but also in the level of individual and group satisfaction.

Procedures: Procedures are plans that specify the required method of handling future activities. They are a chronological sequence of required actions. They are guides for action rather than thought, detailing the exact way in which certain activities should be carried out.

Rules: Rules differ from procedures in that they direct actions without specifying a time sequence. In fact, the process can be viewed as a sequence of rules. A rule can be part of a process.

Programs: Programs are the set of objectives, policies, procedures, rules, task assignments, steps to be taken, resources to be used, and other elements necessary to carry out a given course of action; additionally supported by budgets.

Budgets: A budget is a statement of expected results expressed in numerical terms. A financial operating budget is often referred to as a “profit plan.” This budget may be expressed in financial terms, in man-hours, units of product or machine-hours, or in any other numerically measurable term.

Steps in Planning: Being aware of opportunities, a manager must look ahead to possible future opportunities and see them clearly and know exactly where they stand in terms of their strengths and weaknesses, understand what problems they want to solve and why, and know what they expect to happen acquired. Planning requires a realistic diagnosis of the opportunity situation.

Setting goals: This should be done both long-term and short-term. Objectives define the expected results and indicate the endpoints of what needs to be done, where the main focus should be and what needs to be achieved through a network of strategies, policies, procedures, rules, budgets and programmes. Goals form a hierarchy.

Spaces for development: There are assumptions about the environment in which the plan is to be implemented. It is important that all managers involved in planning agree on the premises. Forecasting is important in assuming: what will the markets be like? What sales volume? What prices? What products? What kind of technical development? What costs? What salary levels? What tax rates and policies? Any new plans? How will the expansion be financed? What are the long-term trends? Because the future is so complex, it would not be profitable or realistic to speculate on all the details of the plan’s future environment.

Identifying alternative directions: The more common problem is not finding alternatives, but reducing the number of alternatives so that the most promising ones can be analyzed. The planner usually needs to do a preliminary review to discover the most favorable options.

Evaluation of Alternative Courses: A proper assessment should be made of the various alternatives available, which may include ash flow.

Course Selection: The best alternative should be chosen.

Numbering plans with a budget The final step is to give them meaning by converting them into budgets. Full company budgets represent the sum of revenues and expenses, with the resulting profit or surplus, and budgets of major balance sheet items such as cash and capital expenditures.

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