Business planning is important for any type of business organization.Business plan is generally prepared to identify the activities that will be required to be performed by the company in the future in order to attain its short term and long term business objectives.

While business objective of developing a business plan may vary from organization to organization, overall objectives of carrying business continue to be long term survival and profitability. A company can either prepare a comprehensive business plan for all of its business processes or a simple plan for its critical business process such as sales management.

Depending on time and cost that management is willing to spend on the development of a business plan,approach and methodology to be used in preparation of the business plan is decided by the top management.

A company can also use SWOT analysis for developing a business plan. SWOT analysis involves listing of internal strengths and weaknesses of the company and external opportunities and threats faced by the company.

Important Steps In Utilizing SWOT For Business Planning

Understand Strengths

A business plan can contain details on the current strengths of the company. It can help in identifying key business processes and executives to handle critical business operations. A business plan can specifically include an analysis of internal advantages that a company has over its competitors.

For Instance, while preparing a business plan, company’s management may specify its production and inventory management processes as its strengths. A company can focus more on capitalizing its strengths and try to improve its competitive advantage.

Minimize Weaknesses

A company may identify certain weaknesses that may hamper the execution of a business plan or some critical activities that are important for the success of the business plan.

By listing weaknesses in the business plan, a company may focus on removing such weaknesses or develop appropriate measures to reduce the impact of such weaknesses on company’s overall performance.

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For Instance, a company may identify lack of talented employees as its weakness and may also define steps to overcome this weakness in the business plan itself.

Identify Opportunities

With the use of SWOT analysis,a company can also list down possible opportunities that may be available in the near future. Appropriate action plans can also be listed down in the main business plan in order to exploit any potential business opportunity.

For Instance, a company engaged in development of telecommunication infrastructure may identify a change in government policy as a business opportunity to develop infrastructure in rural areas. By including a list of activities to be performed in case such a change in policy takes place, a company can meet its business objective of growth (such as increase in market share).

Measure Threats

A company can also list down all possible threats that may exist in the external business environment. By including threats in a business plan, a company can prepare itself for unforeseen events that may hinder the achievement of overall business and company objectives.

For Instance, an expected increase in petrol prices by regulatory authorities may result in a decline in demand for cars. This may impact overall annual sales estimated by a vehicle manufacturing company.

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