1.A plan and goals are the keys to most successfulbusinesses as it gives the business a lead of where it is heading and whatgoals are to be achieved. Two types of planning that are used by businesses arestrategic and financial planning. Strategic planning is used to set priorities,strengthen operations, focus resources as well as adjust and adapt theorganization’s direction as a response to the always changing environment. Thus, the two types of planning have differentfocuses, they are linked together through the fact that both types includedefining objectives, putting the plan into effect and monitoring the differentoutcomes.
One link between the two types of planning is that thepurpose of strategic planning is as mentioned earlier, to give you a sense ofdirection for the progression of the business. By knowing which way to follow,in other words a good mapped out strategic plan, you should be able to eliminateand prevent road bumps on the way. If you are able to cancel out inefficiency,it’s easier to control growth in revenue and hopefully decrease costs. As aresult, it’s possible to foresee and project budgets which can be interpretedas stability and growth in the business. Stability and growth is of greatimportance if you have investors and lenders in the company.
By using financial planning, the business budget willbecome part of the financial plan and I will be easier to plan and projectrealistic incomes and costs from a defined amount of financial resources. In anorganization or business, all departments are equally important in their fieldsand each need their own plan and directions to pursue the department’s goals. Functionaldepartments of an organization such as marketing, operations, sales, executivemanagement and finance etc. therefore use financial planning to reach theirdesired goals as well as their overall requirements that are to be met in everyseparate department.
For instance,if you break down the financial planning and apply it to each department, youwill see how each department’s use the financial planning differently. Financialplanning includes a finance plan, a marketing plan that consists of market researchand promotion, a production plan which demonstrates expenses needed for thefacilities, and a human resource plan that makes sure that to organization hasthe best and most suitable staff for the job. So, eventhough the various departments have different goals, financial planning makessure that each department has a road map to follow for both short and long-termactivities. All areas of business are closely coordinated to the financial planningdepartment to act in compliance to the strategic plans toward a common goalwhich is wealth maximization of the business.