What is business planning and why is it important

Why Planning?

Planning is essential not because what is plan is going to happen but because what is about to happen can be considered against what was planned

Every year Organizations Goes through a Planning cycle to formulate the Business Plans which is then revised every quarter / every month with a Forecasting Process

The idea here is give share holder a visibility in Organization’s performance. Being part of Planning domain since last several here years, I have come up with secret sauce to Win with the Planning

Well let’s start with the understanding of Planning process which are required in growing Enterprises. 
Some common section headers include:

Step 1: Scenario Planning 

Among the many tools a manager can use for strategic planning, scenario planning stands out for its ability to capture a whole range of possibilities in rich detail. By identifying basic trends and uncertainties, a manager can construct a series of scenarios that will help to compensate for the usual errors in decision making — overconfidence and tunnel vision

Step 2: Strategic Planning

Strategic Planning leverages on the Scenario Planning outputs, Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy

Step 3: Budgeting

A budget is a financial plan used to estimate revenues and expenditures for a specific period. It is a management and planning tool, not just an accounting document. It assists in the allocation of resources. A budget allocation is the amount of funding designated to each expenditure line.

Step 4: Forecasting

Forecasting is the process of making predictions of the future based on past and present data and most commonly by analysis of trends. Rolling Forecasts can be used to combine the actual performance of the closed periods along with plans periods.
One case use statistical Forecasting technique to arrive at the base forecast which can then fine-tuned using collaborative process
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Step 5: Sensitivity Analysis

Sensitivity analysis examines the effect of a change in one variable, keeping all other variables constant. Scenarios, on the other hand, change several variables at a time, without keeping others constant. It can be applied to analyse the effect of impact of change in exchange rates, interest rates, Crude Prices, Commodities etc


Conclusion

In Short, Organization need to have each of above mentioned Planning processing to continuously monitor the plans and drive predictability to shareholders and Management board.

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CONCLUSION:
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Now that we have understood the kinds of Business Planning which are required for driving Shareholder value in the Business.  We have put together a 10 Secrets to Winning with Planning which will help to win with Planning.  Download the free e-book now to ensure every planning exercise in Organization drives predictability and value to the Shareholders & Business Owners.

Click Here to download 10 Secrets to winning with Planning

About the Author:

Umesh Biyani:
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Umesh Biyani has 15 years of work experience in Enterprise Performance Management and Analytics. He holds a Masters degree from IIT Roorkee, and prior to Anaplan worked as Partner and Client Director for EPM Consulting Organization based out of Singapore. He specialized in working with CFOs and finance organization to define their EPM vision. Besides work, Umesh enjoys the gym and meditation.