Why a Business Plan is Important to a Company

by ryan on December 16, 2016




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Why a Business Plan is Important to a Company

 

Some companies are fortunate that they operate in industries that they practically monopolized and have no competitors. Those companies that are not so fortunate will have no alternative other than to stay ahead of their competitors in order to survive in the business world or excel in their industries.

An effective and good management control system is one tool that can ensure that a company stays profitable while keeping their operating cost at bay and stay ahead of their competitors.

Doing business is all about making right business decision and optimizing its own resources efficiently. Wastage of times and resources are kept under control and future business directions are well planned and executed orderly.

Business plan forms a very important component in a management control system. The planning process is central to the solutions of many obstacles or problems the business faced. Some of the benefits that can be derived from the business planning process are:

1. Identify weaknesses or areas that are not completely under control or not been given adequate attention by the management.

2. Provide a framework through which all employees are informed of the company’s objectives and direction.

3. Force the management thinks ahead and lay down the future strategy of the company.

4. Deploy a management information system that will facilitate decision making.

5. Identify areas to be developed for future success of the company.

Business plan forces the management to put all their strategies and actions to be taken in written form. Financial budget translates the business plan into figures for easy measurement and monitoring. Therefore it is essential that a business plan be supported with a financial budget to make it more effective and efficient.




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