The Impact of Planning on Business Growth
The purpose of planning is to develop a blueprint for growing a business. The management team creates a vision for a larger, more profitable company. The heart of the planning process is envisioning the actions that must be taken, and the expenditures that must be made, to accelerate the company’s growth. Effective planning requires an attitude of never being satisfied with the company’s current performance. A basic principle of planning is that a company’s future is to a great extent in its own hands.
Businesses grow by uncovering opportunities to acquire additional customers and increase market share. Planning encourages creative strategic thinking, a mindset of continually seeking out emerging markets for the company’s existing products and services. Planning also encourages innovation, finding new products or services that the company could offer to the marketplace.
Growing a business requires deploying resources in a manner that maximizes revenues. Planning involves making decisions about the best possible uses for the company’s resources, which include people, capital, productive capacity and brand recognition. Companies do not have unlimited resources. Planning provides the information the management team needs to prioritize expenditures. Planning also helps a company avoid making poor strategic choices, such as wasting resources on entering markets where competitors have an insurmountable advantage.
During the planning process, company management makes a critical evaluation of all operational areas of the business to determine where improvement needs to be made. No matter how successful a company might be, there are still opportunities to increase customer satisfaction. Satisfied customers are likely to be loyal customers and purchase more from the company, which contributes to growth. Improving operational efficiency can also prevent lost revenues, such as orders being canceled because the company couldn’t deliver products on time.
A major benefit of the planning process is encouraging all members of an organization to work in harmony toward common objectives. Goals are set for all levels of the organization and communicated to all employees. Everyone knows what they are responsible for and what the highest priorities are. All team members understand their best efforts are required for the company to reach its overall goals. Planning opens lines of communication between functional areas so projects that require cooperation can be completed on time. This coordinated effort helps the company grow because more can be accomplished in the same amount of time.
Rapidly growing companies are those that have identified a market need or customer problem, and created product or services that efficiently and cost effectively solve the problem. These solutions are significantly more beneficial for the customer than those the competition is providing. Planning helps companies identify markets that are large and growing, which makes it easier for the company to build revenues. Planning also helps companies gain a clear picture of the competitors they will be going up against. They are better able to develop strategies that take advantage of competitors’ weaknesses. Planning also helps a company create marketing messages that showcase competitive advantages to customers.
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