Business Planning (Junior Cert Business Studies): Revision Notes

Business Planning

Why do businesses prepare a business plan?

Creating a business plan is essential for any organisation, just as individuals and families need financial plans. A well-thought-out business plan helps companies focus on their objectives and determine the best ways to achieve them.

There are several important reasons why businesses invest time in preparing comprehensive plans:

Improved efficiency and success

Organisations that engage in thorough planning tend to be more successful because they operate more efficiently. When everyone understands the company's direction and goals, resources can be allocated more effectively.

Early problem identification

Planning allows businesses to spot potential issues before they become serious problems. For example, Ryanair's careful route planning helps them identify seasonal demand patterns and adjust their schedules accordingly.

Securing funding

Financial institutions and government grant programmes require evidence of proper planning before they will provide funding. A solid business plan demonstrates that the company has thought carefully about its future and how it will use any money provided.

Achieving specific objectives

Businesses may develop plans to accomplish various goals, such as:

• Becoming a market leader in their industry
• Expanding into international markets
• Supporting social causes or community initiatives
• Implementing environmentally friendly practises
• Providing valuable services to local communities

SMART planning criteria

Specific

Plans need to clearly state exactly what the business wants to achieve. Vague goals are difficult to work towards. For example, instead of saying "increase sales," a plan should specify "increase online sales by 10%."

Measurable

Businesses must be able to track their progress against the plan. This means setting targets that can be measured with real data. For instance, measuring monthly website traffic numbers against a target of 50,000 visitors per month.

Agreed

All stakeholders, including directors, managers, and key staff members, must agree to the plan. If Supermac's directors disagreed about expansion plans, the company would struggle to move forwards effectively.

Realistic

Plans must be achievable given the business's current situation and resources. If a small Irish craft brewery planned to outsell Diageo within a year, this would be unrealistic and potentially harmful to the business.

Time-bound

Every plan needs a clear timeframe for completion. Rather than simply aiming to "grow market share," a business should plan to "increase market share by 5% within 18 months."

Mission statements

Mission statements serve as the foundation for all business planning activities. They are typically brief and direct, clearly communicating what the company aims to achieve and why it exists.

A well-crafted mission statement helps guide decision-making throughout the organisation. When managers face difficult choices, they can refer back to the mission statement to ensure their decisions align with the company's core purpose.

Mission statements often reflect both the business's commercial objectives and its values. For example, while a mission statement might focus on creating quality products for customers, it may also emphasise social responsibility or environmental stewardship.

Irish businesses like Penneys have developed mission statements that emphasise providing affordable fashion while maintaining ethical standards, demonstrating how these statements can balance commercial success with social responsibility.