Professor Philip Kotler, author of Marketing Management, said that there are four stages of

business planning. Businesses which have passed these stages are on their way to sophisticated
planning. Many enterprises are classified in each of these stages:
Unplanned Stage
At the start of the business, the owner-manager is busy looking for funds, customers, materials
and equipment. He has no time for planning. His entire attention is devoted to the daily
operations of his business in his intense desire to survive.
Budgeting-System stage
Eventually, the owner-manager realizes the need to develop and use a budgeting system.
Estimated incomes from sales and expected expenditures are made. This is done to facilitate the
orderly functions of the growing enterprise.
Annual planning stage
The owner-manager drafts an annual plan. He can use either the top-down planning or bottom-up
planning. In top-down approach, the owner-manager provides the goals and let the employees
comply with them. In the case of the bottom-up approach, he encourages his employees to
participate in planning the goals and strategies of the enterprise. The first approach in planning is
autocratic while the other one is democratic.
Strategic planning stage
As the business enterprise becomes bigger, a long-rage planning is needed. This is a three-or
five-year plan. Such plan has flexibility to able to adjust to changing conditions. An executive of
the Xerox Corporation claims that some of their plans are being revised every day of the year. At
this stage, planning develops into a more strategic character.
Criteria of Effective Planning
1. The plan should state clearly its objectives. Such clear statement is necessary so that hose who
will be involved in the execution of the plan will understand, believe, accept and support it.

2. The plan should provide measures for a satisfactory accomplishment of the objectives in terms
of quantity, quality, time and cost. These help in delegating responsibility and measuring results.

3. The plan should state the policies which should guide people in attaining the objectives.

4. The plan should indicate what department or unit will be involved in accomplishing the
objectives. It may or may not spell out the procedures for performing the required work.
5. The plan should indicate the time which should be allowed for each activity. It may be
necessary to establish a target data for completing the activity.

6. The plan should specify the required resources and their corresponding costs.

7. The plan should designate the officers who will be held accountable for the accomplishment of
the objectives. Sufficient authority should be delegated to such officers/executives.

ORGANIZATIONAL AND FINANCIAL

The legal form of organization in a business plan is used to decide how the organization
will function, how roles will be arranged and assigned, and how relationships will work. A
business plan with an organizational structure helps readers understand how your company is
organized and who is in charge of what. These readers are frequently potential investors and
lenders, and outlining your organizational structure for them will inform them of who is in
charge of particular duties. All of this must be taken into account when developing a company
plan tailored to your specific objectives.
Writing a small business plan takes time and effort, especially when you have to dive into
the numbers for the financial section. But, working on the financial section of business plan
could lead to a big payoff for your business. The financial part of the business plan introduces
numbers. It comes after the executive summary, company description, market analysis,
organization structure, product information, marketing and sales strategies. Generally, the
financial section is one of the last sections in a business plan. It describes a business’s historical
financial state (if applicable) and future financial projections. Businesses include supporting
documents such as budgets and financial statements, as well as funding requests in this section of
the plan. The financial section of the business plan is critical for moving beyond wordy
aspirations and into hard data and the wonderful world of numbers.