Stability is the ability to withstand a temporary problem, such as a decrease in sales, lack of capital or loss of a key employee or customer. Analyzing your cash flow and a variety of negative scenarios will help you determine whether or not your business is financially stable. Review your production and overhead expenses and determine their costs per unit. Determine your profit margin per unit at your current sales levels.
Sometimes people use the term business plan when they are referring to a project. Some projects are very substantial and equate to an autonomous independent business activity, in which case a business plan is entirely appropriate.
Business planning terminology can be confusing because much of it is used very loosely, and can mean different things. Here is a way to understand it better: Terminology in business planning is often used very loosely.
When people talk and write about business planning different terms may mean the same thing, and a single term can mean different things. Consequently business plans tend first to look outwards, at a market, before they look inwards, at finance and production, etc.
This means that most business plans are driven by marketing, since marketing is the function which addresses market opportunity and need, and how to fulfil it.
In fact, marketing refers to much wider issues than sales and selling. Marketing involves the strategic planning of a business or other organizational provider through to every aspect of customer engagement, including market reserach, product development, branding, advertising and promotion, methods of selling, customer service, and extending to the acquisition or development of new businesses.
Sales or selling is an activity within marketing, referring to the methods and processes of communicating and agreeing and completing the transaction sale with the customer. Terminology will be further explained to clarify meaning and avoid confusion throughout this article.
Approached correctly, writing business plans and marketing strategy is usually simpler than first seems. Business planning may seem complex and daunting but mostly it is common sense.
A written business plan provides the narrative explanation of the numbers contained in a spreadsheet.
When we see lots of numbers in a computer spreadsheet we can forget this, but the numbers are merely a reflection of scale and detail, and of computerised calculations and modelling, etc. In fact often when we are confronted with a complex planning spreadsheet containing thousands of numbers, what we are actually being offered is a ready-made planning tool.
In many cases, where business planning is a continuation of an ongoing situation, the most frightening spreadsheets can provide a very easy template for future plans, especially with a little help from a colleague in the acciounts department who understands how it all works.
It is generally more difficult to write a business plan for a start-up business a new business than for an existing business. Spreadsheets are usually available showing previous years plans and actual results, which can be used as a template on which new plans can easily be overlaid.
Writing a new business plan for the continuation or development of such an existing situation obviously enables much of the planning to be based on existing figures, ratios, statistics, etc. New business start-ups - especially if you are the owner or entrepreneur - present bigger planning challenges in some respects because we have no previous records to act as a guide, but in other respects they offer wonderful opportunities to create genuinely innovative and exciting founding principles - your own new business philosophy - on which your plans can be built and developed.
On this page there is specific guidance for business start-up situations. Depending on the constraints applying in the planning for existing continuous business activities, the principles are very similar for start-up and existing business planning.
Adapt it to suit your purposes. The numbers could be anything: If using these materials please adapt the spellings to suit your situation. The business entity could also be a proposed start-up, a new business development within an existing organization, a new joint-venture, or any new organizational or business project which aims to convert action into results.
The extent to which a business plan includes costs and overheads activities and resources eg. Business plans written at business unit or departmental level do not generally include financial data outside the department concerned.
Most business plans are in effect sales plans or marketing plans or departmental plans, which form the main bias of this guide.
The extent to which financial and commercial numerical data is included depends on the needs of the business. The extent to which this details the sales plan also depends on the needs of the business. Some organizations interpret this to be the same as a business plan or a marketing plan. That said, the principles explained here can be applied to business plans of all sorts.
Business plans are often called different names - especially by senior managers and directors delegating a planning exercise that they do not understand well enough to explain.
Typically these names reflect the department doing the planning, despite which, the planning process and content required in the document is broadly similar. Write your aim large as a constant reminder to yourself, and to anyone else involved.
Keeping your central aim visible will help you minimise the distractions and distortions which frequently arise during the planning process.At Financial Planning Academy, we offer CFP Certification Program with % placement assistance.
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As you can see, the XYZ Company is forecasting its Total Factory Overhead at $60, in X. In other words, to produce 10, units in X, the XYZ Company expects its Manufacturing Plant Expenses will be $60,