What is The Importance of Planning For The Business?

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It is impossible to imagine a professional who does not know what the sales planning, and even more so neglecting this method. Any more or less “advanced” businessman, clearly understands that a well-planned expenses and revenues – this is the first step toward the successful development of the business.

The concept of “sales planning” includes specific figures of the profit, which calculates an entrepreneur in a given period.

For simplicity, experts usually are three basic ways to create such a plan.

The first method is relatively simple. The businessman, counting their profits, for example, for the quarter, put into the plan the same figure. If you use this method, then, of course, you can throw 30 percent, but it is important to remember that this is justified only under very stable situation. This method has several pitfalls: All payments will be powerless in the face of crisis, or a force majeure situation. Also, the method is not suitable for beginners business: how you can speak with confidence about the prospects when it is not clear to the general trend of development?

The second method is also not very cunning. You well know how much money you need to maintain your business ‘afloat’, put the figure in the plan that covers all your expenses. Very well, if I can earn more, but gleaning up to a certain “threshold” would be fatal. There will need to consider both planned and incidental expenses.

The third way some adventure. What is your favorite number? With six zeros? Or, perhaps, with the family? Feel free to put it in the plan, if you will of course differ enviable optimism. In general, this approach is not justified, especially if you have been too ambitious in drawing up the plans. Remember the sad experience of China’s great leap forward his policies, when after the war, the party set a goal for 3 years to reach the level of developed countries. By the end of the period the country was in an even greater crisis than before the reforms. Those rates, which have been set, simply destroyed the already weak economy. In general, if you do not want to be disappointed in the end of the period of their income, it is better to avoid such careless actions.

In planning it is important to adequately assess their capabilities. How do you determine whether you have done everything right?

If at the end of your work and plan for revenue figures differ by a negligible amount, no matter in what direction – so everything is done right. But if your income is much overlap plan, that is something to think about. You may have unconsciously lowered expectations.

Key to successful planning – its brevity. Do not take more time, one year will be just right. More than a year to plan impractical and too difficult. In the shorter term planning is possible, but especially to get involved, breaking a period of weeks, too, is not worth it.

So, to set a date – plan for the year. What’s next?

Then there are two main approaches.

The first is known as “bottom-up”. Expectations of profit come from currently available resources. Considering the current capital, the number of employees, range, etc.

The second method is the opposite. First, we determined the volume and the desired profit, respectively, to figure out what it takes to make the resources to attract, how to extend the range or the range of services, as needed personnel, etc.

From the well-drawn plan of the future of your business. Of course, caution is not necessary to forget, but its ambitions do not give up. We must start with the stabilization of its turnover in the future set targets to increase it.

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