The Importance of Strategic Planning in Business
If you are not planning, you are then planning to fail. This is a saying that is enough to convey the importance of planning in any venture.
Strategic Planning Helps the Owner to Take Informed Decisions
If you are making a strategic business plan, make it simple so that you can easily understand it. This is necessary as every employee in your company should be able to comprehend this plan. This plan should take into account your strengths and weaknesses. This is called SWOT analysis that makes a frank assessment of your strengths, weaknesses, opportunities, and the threats that may be real and perceived. Strategic planning in business is done to remain clear about the purpose of business, its goals and major objectives, the core values of the company should not be diluted or tinkered with, and the vision about where the company desires to stand in a few years time from now.
If strategic planning has been done, then it becomes easy for the management to think about entering potential new markets. You know the money, time, and energy required to penetrate a new market. Strategic planning in business allows you as the owner to know beforehand what the return on investment will be in the new market.
Breakeven means a point at which a business is neither making a profit nor a loss
In every business, there is inflow of funds and an outflow of funds. If you as a business owner do not take into account fixed and recurring costs, you are bound to falter in the longer run as you will miscalculate the profits earned from the business. Calculation of breakeven analysiswillensure that your investments do not go down the drain and you are able to earn profits that are real and not made up. It is not easy to indulge in an exercise of calculation of breakeven analysis because of extrapolations that are required to be made. Nevertheless, breakeven analysis is crucial so that you are made aware to not spend money on a project that is difficult to implement or is unrealistic to achieve.
In small businesses, it is imperative for business owners to know the minimum number of sales they need to make in a month or so to keep the business running. This breakeven point means the business is not making a profit though it is also not running losses. Calculation of breakeven analysis makes you as a business owner confident that you are not making any losses in your business. Calculation of breakeven analysis is not difficult to make provided you have a clear idea of income and expenses.
Learn more about calculation of break even analysis and strategic planning in business by clicking on the links.