Planning is essential for any business to thrive, without a proper planning the business will collapse. A proper method of planning involves these two, operations and finance. Operations planning will focus on production and sales, while finance planning will be on how well to finance the operations effectively. But, to ensure the process is fully integrated, financial planning will be taken as a single process consisting of financing and operations.
However, since strategic decisions have a great effect on the financial planning, the budgeting process will start within the process of strategic planning. In the strategic planning the goals and the objectives of the business will be established and a mission statement comprising of the reasons for the business existence and its future plans will be developed. The strategic plan will then be implemented by developing an operating plan which will be composed of a set of financial budgets. To develop the budget, forecasting will begin on the main purpose of the business, which is selling its goods.
In order to estimate the sales, its past histories and the factors that influence it, will be evaluated. A market research will then be conducted in order to understand the future sales; they may stabilize, grow or even fall. The sales may grow if production capacity is limited or may fall due excessive production. After collecting all the relevant information and analyzing it, then the sales volumes can be estimated for that period of planning. The sales estimates will then be used to estimate the budget.
Furthermore, a simple and accurate forecasting on demand will be done, in order to predict the demand of the products and the best selling location. The stores will be grouped according to customer profile or size so that the customers’ needs are met without having to add many store planners. To maximize efficiency and reduce redundancy the store channels will be integrated but their characteristics will be maintained (Manhattan associates).
Manhattan associates. Retrieved May 5 from http://www. manh. com/planning/index. html