Financial planning with financial projections are high priority functions of management.
Technology of financial planning is well developed and is regularly used. Business strategy and strategic aims which show what to do in the whole are formulated on the basis of mission and the main principles of the company which answer on the question “what for?”. Then they are specified into the tasks and tasks transfer into concrete assignments. Then all necessary material, financial, personnel and time resources are accounted and if it’s necessary assignments, tasks and aims can be reconsidered. As a result the plan which can be brightening into life appears. It’s very important to have some reserves for unforeseen circumstances.
The process of planning is usually divided into 8 stages
Stage 1. Goal-setting (formulation of goals). What just the company wants to achieve? This is the most difficult stage. It can’t be formalized.
Stage 2. Compilation, analysis and value of the ways of achievement of delivered aims. Usually it is possible to act in different ways. Which of them is the best one? Which of them can be thrown back as unreasonable ones?
Stage 3. Making out of the listing of necessary actions. What is necessary to be done in order to bring into life the way of aim’s achievement chosen in the previous stage?
Stage 4. Making out of the program of works (plan of action). In what order it’s better to fulfill intended actions chosen in the previous stage? Take into consideration that most of them are connected with each other.
Stage 5. Analysis of resources. What material, financial, information, personnel resources can be needed for realization of the plan? How much time is required for its realization?
Stage 6.Analysis of the developed variant of plan. If developed plan solves tasks delivered in the first stage? If it’s necessary to return to any of the previous stages?
Stage 7. Preparation of specified plan of actions. It’s necessary to specify the developed plan, to choose and agreed execution period of single works and to account all necessary resources. Who will be responsible for single parts of the work?
Stage 8. Control under fulfillment of the plan, making corrections if it’s necessary.
The results of planning is often initiate as business plan.
The annual plan of the company is composed as the complex program of industrial, financial and economic activity. It consists of the following interconnected sections:
– Production plan;
– Technical development bad organization of production;
– Increasing of economic effectiveness of production;
– Norms and normative;
– Capital investments and capital building;
– Logistical support;
– Labor and personnel;
– Production cost value, profit and profitability;
– Funds of economic stimulation;
– Financial plan;
– Plan of nature protection and rational use of natural resources;
– Social development of the collective.
The effectiveness of the financial planning can be determined in due diligence.
Illustrative business plan samples
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