Entrepenuer: What it takes
CHAPTER 4
FINANCIAL PLANNING
FOCUS We begin by explaining the nature of business planning and placing financial forecasting within that broader context. Once we get into financial planning we focus on exactly how to construct plans from physical assumptions about a business and its environment. Finally we look at some of the problems created when plans function as both goal statements and projections of what is most likely to happen in the future.
PEDAGOGY This chapter focuses on "how to do it." That is, how to really build a financial plan from a series of physical and economic assumptions. This is an important distinction of this text. Most books talk about planning, but actually teach only the overly simplified percentage of sales approach. After reading this chapter, students are able to do real business financial plans.
TEACHING OBJECTIVES Students should gain a broad appreciation of planning concepts and the managerial problems associated with plans and planning. They should also emerge from this chapter able to construct real plans based on fairly complex assumptions.
OUTLINE
I. BUSINESS PLANNING A business plan is a model of what management expects a business to become in the future. A. Component Parts of a Business Plan A typical table of contents showing the important sections of a business plan. B. The Purpose of Planning and Plan Information Planning is valuable to management for the cohesive and goal setting benefits of the process. It also provides vital information to outside investors. C. Credibility and Supporting Detail A credible plan must show enough detail to convince readers that a thorough analysis was done in putting it together. D. Four Kinds of Business Plan Strategic and Operational planning, Budgeting and Forecasting. The characteristics and significance of each. Relating planning for small and large businesses. E. The
FINANCIAL PLANNING
FOCUS We begin by explaining the nature of business planning and placing financial forecasting within that broader context. Once we get into financial planning we focus on exactly how to construct plans from physical assumptions about a business and its environment. Finally we look at some of the problems created when plans function as both goal statements and projections of what is most likely to happen in the future.
PEDAGOGY This chapter focuses on "how to do it." That is, how to really build a financial plan from a series of physical and economic assumptions. This is an important distinction of this text. Most books talk about planning, but actually teach only the overly simplified percentage of sales approach. After reading this chapter, students are able to do real business financial plans.
TEACHING OBJECTIVES Students should gain a broad appreciation of planning concepts and the managerial problems associated with plans and planning. They should also emerge from this chapter able to construct real plans based on fairly complex assumptions.
OUTLINE
I. BUSINESS PLANNING A business plan is a model of what management expects a business to become in the future. A. Component Parts of a Business Plan A typical table of contents showing the important sections of a business plan. B. The Purpose of Planning and Plan Information Planning is valuable to management for the cohesive and goal setting benefits of the process. It also provides vital information to outside investors. C. Credibility and Supporting Detail A credible plan must show enough detail to convince readers that a thorough analysis was done in putting it together. D. Four Kinds of Business Plan Strategic and Operational planning, Budgeting and Forecasting. The characteristics and significance of each. Relating planning for small and large businesses. E. The