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, requires the implementation of a plan. A document detailing a company’s expected course of action over a specified period typically includes a detailed list and analysis of risks and uncertainties. For the small business, you must examine the proposed products, the market, the 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 like a production line. What goes to the beginning are raw materials and unfinished assemblies. Here, the raw materials include:
-Employee talent and initiative
-Capital -Market position
-The solvency of the company.
-The earning capacity of the company.
-Evaluation of changes in the market.
It should have four main aspects:
– Their contribution to the purpose and objectives.
– Its primacy among the tasks of the manager
– His omnipresence
– The efficiency of the resulting plans.
The Contribution of Planning to the Purpose and Objectives: Each plan and all its supporting plans must contribute to the achievement of the purpose and objectives of the company.
The Planning Primacy Manager must plan in such a way as to lead to proper organization, staffing, leadership, and control that support the achievement of company objectives. Planning and control are inseparable. Any attempt to control without a plan is pointless, as there is no way for people to know if they are going where they want to go. The plans thus provide the control standards.
The pervasiveness of planning: Planning is a function of all managers, which varies with the authority of each manager and with the nature of the policies and plans assigned by superiors. If managers are not allowed a degree of planning discretion and responsibility, they are not true managers.
The Efficiency of Plans: The effectiveness of the plan refers to its contribution to the purpose and objectives. A plan is efficient 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 degree of individual and group satisfaction.
Procedures: Procedures are plans that establish a required method for handling future activities. They are chronological sequences of required actions. They are guides for action rather than thought and detail the exact way in which certain activities should be carried out.
Rules: Rules differ from procedures in that they guide action without specifying a time sequence. In fact, a procedure could be considered as a sequence of rules. The rule may be part of the procedure.
Programs: Programs are a set of objectives, policies, procedures, rules, task assignments, steps to follow, resources to employ, and other elements necessary to carry out a certain course of action; further supported by budgets.
Budgets: The budget is a statement of the expected results expressed in numerical terms. The financial operating budget is often referred to as the “earnings plan.” This budget can be expressed in financial terms, in terms of labor-hours, product units, or machine-hours, or in any other numerically measurable term.
Steps in planning: Being aware of opportunities, a manager must take a preliminary look at potential future opportunities and see them clearly and fully, know where they are in light of their strengths and weaknesses, understand what problems they want to solve, and why. what and know what they hope to gain. Planning requires a realistic diagnosis of the opportunity situation.
Goal setting: This should be done both long term and short term. The objectives specify the expected results and indicate the end points of what is to be done, where the main emphasis is to be placed, and what is to be accomplished through the web of strategies, policies, procedures, rules, budgets, and programs. The objectives form a hierarchy.
Development of premises: There are assumptions about the environment in which the plan will be carried out. It is important that all managers involved in planning agree to the premises. The forecast is important in the premise: what kind of markets will there be? What sales volume? What prices? What products? What technical developments? What does it cost? What salaries? What tax rates and policies? What new plans? How will the expansion be financed? What are the long-term trends? Because the future is so complex, it would not be cost-effective or realistic to make assumptions about every detail of a plan’s future environment.
Determine alternative courses: The most common problem is not to find alternatives but to reduce the number of alternatives so that the most promising can be analyzed. Usually the planner must do some preliminary examination to discover the most fruitful possibilities.
Evaluation of alternative courses: Of the various alternatives available, a proper evaluation must be made that may involve ash flow.
Selection of a course: The best alternative must be selected.
Numbering plans by budgeting The final step is to make sense of them by turning them into budgets. A company’s general budgets represent the sum total of revenues and expenses, with the resulting profit or surplus, and budgets for major balance sheet items, such as cash and capital expenditures.
