Financial projections is the view in future and the value of possible ways of development, consequences of different decisions. Planning is the development of consequent actions which allows to achieve the aims. There is no exact border between projections (knowledge of the future) and planning. Projection is not full-determined plan and plan is adjusted project. The most significant difference between the plan and the project is the presence in the plan the elements of choice, taking of decisions and actions on realization of these decisions.
These two functions are closely connected in the work of manager. Besides they connected with such important aspects in the work of every enterprise as business strategy, business plan, marketing plan. The efficiency of both financial planning and financial projections can be examined in due diligence.
The main principles of planning are:
– the fullness – it’s necessary to take into account all aspects and directions of the activity;
– specification: the depth is defined by the aim of planning;
– simplicity and clarity;
– elasticity and malleability (the use of planning reserves, account of multiplicity of possible alternatives, delay of details up to clearing up of circumstances, variation);
– equalization during planning (account of “gooseneck”);
– economic efficiency. It’s necessary to take into account the usefulness ( that is usually difficult to do) and charges on the planning during the estimation of economical efficiency of the planning.
The realization of such function as planning requires to define exactly:
1. The object of planning (what is planning)
2. The subject of the planning (who plans)
3. The period (Horizon) of planning
4. Facilities of planning (for example, computer resources support)
5. Methods of planning (how to plan)
6. Coordination of the plans (how, with whom and under what conditions).
Types of projections and planning in the company.
Hierarchy of subordinate types of planning includes:
– General planning which is long-termed and mainland one. This is the conception of the company.
– Strategic planning is the long-termed development of the company, of living sphere, of production, of Research and Advanced Development and of the personnel.
– Tactic planning contains of the planning of conditions of economic operations of production capacity, industrial facilities, capitals, investments, personnel and others;
– Operative planning of concrete actions on short-termed period.
Illustrative business plan samples
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