IMPORTANCE OF PLANNING IN BUSINESS

Planning is one of the managers most important tasks, no matter of the size and legal form of the company. It can be short, medium and long-term designed. Short-term planning includes projections of upcoming business activities on a daily, weekly, monthly and yearly basis (up to one year) and also referred to as operational planning. Medium-term planning is often considered as a projection of up to five years period, and also referred to as tactical planning. Long-term or strategic planning is an activity that encompasses projections of future business development for periods of five, ten or more years. Regardless of the far-reaching planning it should be consistent and correlated with the mission and vision of the company. In the planning process, as one of the constituent tools and methods, we can be served by SWOT analysis that detects the strengths and opportunities, weakness and threats to the environment and the company itself and finds opportunities to avoid potential risks and options for the realization of the pursued goals. Planning in this context is actually the process of anticipating future business events, with the engagement of the necessary resources to make these goals truly achieved. The document resulting from the planning process and the decision-making phase is called the Business Plan. The importance of this document is never sufficiently emphasized and its biggest advantage in the context of planning is that through a single study it can be covered by the short, medium and long-terms planning. The Business Plan contains objectives, mission and vision of the company and can be considered as a personal map of the organization. What is certainly good about the Business Plan is the fact that is a “live” document, that can be adapted to different needs. For example, if we are planning an investment, we will usually adapt the long range of planning to the project lifetime, in which we will evaluate the cost-effectiveness of this investment. Investing in entrepreneurship very often implies the use of foreign (others) capital, so in this case the lifetime of the project will be aligned with the repayment of the loan. If we are planning an assignment with a repayment period of five years, we will make a Business Plan for the same term. Therefore, if our basic document contains a plan for ten years, we will short the specific version to five years and enter information about the planned investment, structure of financing and the results of that investment. Except for investment planning, making the Business Plan is applied as a decision-making method in other upcoming business events in the life of a company such as, for example, introducing new products and/or services, opening new business unit(s), market expansion and others. In most cases, each of these events assumes a certain investment. Therefore, planning is the primary and basic task of each manager and a good organization is simply not possible without the planning component. The most efficient way of planning is to create a quality Business Plan.