Strategic planning involving financial data is very significant in formulating a business plan. Financial planning is the act of determining the ways and means that a business will follow to achieve its strategic objectives and goals. Financial planning is very important to a company and it is usually formulated immediately after a company has set its vision and objectives (Moran, Gwen, and Johnson, 68). It describes the activities, equipment, resources, and materials that are needed by the company to achieve its goals and objectives. It determines the success or failure of an organization since it provides a business plan with rigor as it confirms whether the set objectives are achievable from a financial perspective. It can also assist the manager of a company to set financial targets and also reward the staff for meeting the set objectives. The specific area in this discussion is the analysis of business environment.
It becomes easier for one to best fit his/her business into different business environments after collecting the necessary information about the external environment. This is only possible after clearly understanding the strengths and weaknesses of one’s firm. The primary task in this analysis is to identify the factors that will give the company a competitive advantage. For example, holding an exclusive license or a patent on a particular service or product may make one enjoy some competitive advantage. The other important strategy in this case is the aspect of flexibility (Zacharis, Andrew, Stephen, and Jeffry, 46). This is often an advantage enjoyed by smaller companies over larger rivals since they are able to respond more easily and with low cost to taste changes and mood swings in the market. The other important aspect is the nature of technology as it helps a business yield competitive advantage over its rivals. Financial analysis requires that after identifying the areas in which a business has competitive advantage, it is equally important to analyze the areas of weakness and then take necessary action for correction.
Moran, Gwen, and Sue Johnson. The Complete Idiot’s Guide to Business Plans. New York, N.Y: Alpha Books, 2009. Internet resource.
Zacharakis, Andrew, Stephen Spinelli, Jeffry A. Timmons, and Jeffry A. Timmons. Business Plans That Work: A Guide for Small Business. New York: McGraw-Hill, 2011. Internet resource.