Entrepreneurship development and Industrial Consultancy

Lesson 11. IMPORTANCE OF PLANNING, MONITORING, EVALUATION AND FOLLOW UP

Module 2. Concept and working of entrepreneur

Lesson 11

IMPORTANCE OF PLANNING, MONITORING, EVALUATION AND FOLLOW UP

11.1 Introduction

Planning, organizing, controlling and leading are the four basic management functions applicable to all business organizations. Out of these four planning is the first function to be carried out to start any enterprise. Planning provides a step wise procedure to establish and operate an enterprise. A successful enterprise results due to good workable area, meticulous planning and implementation. In case of enterprise, planning is related to business plan activities. A business plan acts as a guide for entrepreneurs. It serves the following main functions: It provides logical and structural overview of the enterprise highlighting the key activities to be carried out in different phases.

1. It provides guidelines to compare ongoing progress.
2. It identifies the key resources (man power, machines, time etc.) required at different stages of growth of enterprise.
3. It helps in participative management as all the employees are aware about future activities.
4. It provides an authentic document for communicating aspects of enterprise with financers, government and other stakeholders.

11.2 General Steps of Business Planning Process

1. Idea generation: This is the first preliminary stage of business planning process. New ideas can be obtained from consumers, employees, research and development, market intermediaries etc. certain methods also can be utilized by entrepreneur/business organization such as group discussion, brain storming, market research etc.

2. Assessing the environment: Before venturing into the commercialization of promising ideas generated by previous steps. It is necessary to thoroughly analyze both macro (external) and micro (internal) environments so as to know strength, weakness, opportunities and threats faced by the organization/entrepreneur. Here it is necessary to collect maximum information for all the environmental factors which will have both short term and long term impact on the organization /entrepreneurs future plans.

3. Feasibility analysis: On finding the environment suitable for the enterprise, detailed feasibility study is to be carried out viz., market feasibility, technical/operational feasibility and financial feasibility. Market feasibility is concerned with ascertaining present and future aggregate demand for the enterprise product/service and expected market share of the proposed enterprise. Different methods of demand analysis are used for this purpose. Technical/operational feasibility helps to know the operational ability of the proposed enterprise. The technical feasibility covers the parameters of raw material availability, material requirement planning, plant location, plant capacity, machinery & equipment, plant layout etc. Financial feasibility is also carried out at the end to assess financial issues of the proposed enterprise. Different cost estimates and profitability projections are done. If all these feasibility studies indicate viability of the proposed enterprise then detailed functional plans covering all functions (production, finance, marketing, human resource etc) are made.

4. Project report preparation: Using the information so far collected, a project report/ business plan is prepared. A business plan is a written document describing step by step strategies to establish and operate an enterprise.

5. Evaluation, control & review: In order to retain leading position in today’s competitive business world, it is necessary for an enterprise to continuously evaluate the functioning and do necessary revisions in the light of changed circumstances.

11.2.1 Developing a business plan

Developing a business plan is an important step in establishing any new enterprise. A business plan act as a roadmap to guide the future of the enterprise and provide direction for expansion, diversification and evaluation of the enterprise.

11.2.2 Appropriate format of business plan

The business plan should be professional so that enterprise is portrayed in a positive manner. Financial assistance is obtained based upon business plan. A business plan should include executive summary, mission statement, goods and objectives, back ground information, organizational matters, marketing plan and financial plan.

11.3 Executive Summary

It describes the business or proposed changes to the existing business and category of industry to which the business / enterprise belongs. It outlines the direction and future plans or goods of the company, the methods to be employed to achieve the goals. It also describes challenges that will be faced by the enterprise / business.

11.3.1 Mission, goals and objectives

The mission statement should be short and should give the key idea or reasons for existence of enterprise. Goals and objective show, what the business wishes to accomplish and the steps needed to obtain the desired results. Goals and objectives should be specific, measurable, attainable, reasonable and time bound.

11.3.2 Background information

This covers information about history of the enterprise, the current state of industry in which enterprise fall and information from the reputed sources about future of industry in which enterprise falls

11.3.3 Organizational structure

This includes description about organizational structure, management team, risk management etc. There are different forms of organization structures. The structure selected should be appropriate to the management skills and style of the owners. For other than sole proprietor type of business enterprise, management team consisting of all parties involved in the decision making process should be specified. The risk management portion describes how the enterprise will handle unexpected or unusual events.

11.3.4 Marketing plan

It covers aspects like characteristics and advantages of product of the enterprise, sales location, promotion, advertising, pricing and the associated costs of all market related activities.

11.3.5 Financial plan

This covers aspects of types of records to be maintained, signing authority for banking transactions, financial assumption etc. Financial projection for at least five years should be indicated.