Objectives, Timelines and Features of Business Planning

Content Summary

For a business to satisfy the demands of its clients, it must understand what they want and how much of it they want. If a business finds a way of predetermining its future, it may be able to come up with a simple and effective production plan. The entire process of understanding and analyzing current and past data to come up with a demand and supply pattern through a scientific and systemic approach is referred to as business forecasting/planning. It may estimate the future demand and supply of your products in terms of monetary value or number of units.

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Demand forecasting is intended to help a business to manage what it presently has in preparation for the future by determining the most likely future demand trend. It may, however, be limited by the fact that it is difficult to make predictions for products that have no existing data.

Objectives of Business Planning

By accurately carrying out business planning, you may be able to plan your resources in an economical manner, thereby promoting their optimal use. It also assists you in establishing a connection between the different variables that contribute to the production of your product.

Timelines of Business Planning

For business planning to be valid, it has to be confined to a specific timeframe. Here are the categories of the timelines.

a. Long-Term Planning

This is a type of forecast designed for a time frame that exceeds three years. This form of forecasting is mainly used to facilitate the planning of long-term projects like capacity planning or expansion planning.

b. Mid-Term Planning

This type of forecast is designed for a time frame between three months to three years. It is often used to facilitate the planning of production and layout plans, marketing and sales plans, capital and cash budgeting plans.

c. Short-Term Planning

This type of forecast is designed for a time frame between one day and three months. It is often utilized to facilitate the planning of the daily inventory plan, production plan and labor workforce scheduling.

Features of a Good Business Forecast

A good and accurate business forecast should offer you enough time to prepare for future demand and supply of your products and services. It should also be easy to interpret and provide information that is relevant to the manufacture of the commodity.

By having an understanding of the objectives, timelines and features of business planning, you should be able to come up with a business forecast that is helpful to your business model.