Planning is so badly needed by small businesses so that they look ahead to the future. Planning is the important first step so that the future course of the business is determined. Planning is setting objectives and procedures to achieve those objectives. You must know where you are going and how to get there for your small business. With planning you can inform investors about your chances of success. A well laid out plan for your small business will interest investors, provide an operating guide for your business, provide direction and motivate employees, and provide the elements needed to attract customers and potential employees.
Small business owners so often neglect planning. Many reason planning is neglected are due to time constraints, fear of revealing problems or weaknesses, lack knowledge of how to plan, and feeling that the future is unpredictable and cannot be planned for.
The two overall categories of planning are strategic planning and operational planning. Strategic planning is the long-term direction that is needed to have their mission succeed. Strategic planning is the definition of the business’s mission and objective and the strategies needed to accomplish these missions and objectives. The mission is the long-term direction of the business. The objectives are shorter term actions needed to achieve the mission. Strategies are the course of actions that will achieve the objectives. Operational planning is the setting of policies, methods, procedures, and budgets of the business. The strategic planning usually occurs at the beginning before starting your business while operational planning is continuous occurring before and after the business begins operations. Strategic planning is also considered long-term planning while operational planning focuses on more short-term. Strategic planning is the big picture of the business with the operational planning being the intricate details.
Planning involves policies, methods and procedures, budget, and standards. Policies are statements that guide the managers with their decisions. They are the plans of actions that guide the decision toward the goals of the business owner. Methods and procedures are the detailed instructions for employees to perform their jobs. They are the specific actions in order to follow so that consistent results are achieved. Budgets are the detailed plans expressed in monetary terms for a future period. A budget is a list of revenues and expenses which is a plan for spending and saving for a specific future period of time. Standards are the norm for the business, they are the practices that that he business owners deem acceptable.
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