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Business analysis and planning are two phases a company goes through prior to making important decisions. Using various analytical techniques, a company looks at current operations to discover where new profit opportunities exist. Planning represents a process to alter operations in order to shift resources into the new opportunity. Hence, a relationship clearly exists between business analysis and planning in a company’s normal operations. In some cases, companies may use the same employees to work these activities.
Analysts often use information gleaned from financial and operational activities. For example, a company may look at its financial statements and use ratios to determine the efficiency and effectiveness of its operations. Then, a comparison of current ratios against previous ratios can help a company decide how to improve operations from a financial standpoint. Financial business analysis and planning are probably among the most important in a company’s review process. Other tools are also available for financial analysis purposes.
Many companies conduct various business analyses throughout the calendar year. This allows them to ensure effective operations at all times. Business planning, however, is only necessary when making changes or upon the discovery of negative business trends. In this case, the company uses business analysis and planning in order to define what problems are the main causes for negative trends. Poor product quality may be one example of what prior analysis uncovers to make plans for improving problematic business processes.
Budgets are another example of business analysis and planning in action. Companies use budgets as both road maps for future operations and cost control methods. Proper budgeting requires the use of previous financial data in order to create limits for future expenditures. Analysis and planning coincide here because those creating the budget also need to make plans for additional capital expenditures. The result is a workable plan that many individuals in the company will use to complete operations and enhance the company’s overall operations.
There is no real time frame for a company to complete the various techniques involved with business analysis and planning. Growth or flexible companies often never stop these two activities as the changes that result typically improve market share. The measurement of external factors may also exist during these two stages. Their inclusion can help present a better picture of the company’s future plans. Alterations to the analysis and planning stages may occur even after the initial stages are complete.
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