Lesson 11 of 28
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The Business Planning Process

Overview

  • Sources of planning ideas
    • Situational analysis
  • Vision, goals and/or objectives
    • Vision
    • Business goals
    • Long-term growth
  • Organising resources
    • Operations
    • Marketing
    • Finance
    • Human resources
  • Forecasting
    • Total revenue, total cost
    • Break-even analysis
    • Cash flow projections
  • Monitoring and evaluations
    • Sales
    • Budgets
    • Profit
  • Taking corrective action

Sources of planning ideas

Situational analysis is important in order to plan ideas. A SWOT analysis needs to be undertaken.

Vision, goals and/or objectives

  • Vision: broadly states what the business aspires to become; its purpose and its function
  • Mission: a statement of how the business will achieve its vision
  • Business goals: (social, financial, personal) (strategic, tactical, operational)

Organising resources

  • Operations: production of good/service
    • a business plan effectively details the inputs, processes, and outputs involved.
  • Marketing: activities undergone to develop a product that suits the target market
    • Involves advertising to entice customers
    • Market analysis – social trends, market research, demand, competitors
  • Finance: source of finance
    • Plan outlines where these funds go
    • Sales forecast, cash flow statement, break-even point
    • Needed to cover initial and ongoing expenses
  • Human resources: employer employee relationship
    • Number of employees, the skills they need and their wages
    • HR laws – WHS, awards, anti-discrimination
    • Training – induction, mentoring and specific
    • Monetary and non-monetary rewards
    • Acquisition – staffing needs, recruitment, selection

Forecasting

  • Total revenue: sum of all money received by the business (sales, fees and interest earned)
  • Total cost: all the costs incurred in the operation of the business (fixed and variable)
  • Break-even analysis: financial planning tool that can be used to forecast how many items to be produced and sold in order to cover cost.
  • Cash flow projections/statement: Cash flow projection is a breakdown of the money that is expected to come in and out of your business.

Monitoring and evaluations

  • Sales: income from products sold
  • Budgets: an estimation of revenue and expenses over a specified future period of time and is usually compiled and re-evaluated on a periodic basis
  • Profit: The revenue remaining after all costs have been met is the business’s profit.