Why is planning for a new business harder than planning for an established operation? In which do you have to make more assumptions? Why? What implicit assumption provides a shortcut in one situation?
A business plan plays a significant role in the success of business organizations. According to Lasher (2017), a business plan is a written document that details the strategies of business owners on how they aim to run the business. Planning helps organizations to put a keen eye on specific organizational areas to enhance smooth operations. A detailed business plan usually gives guidance to an organization in purpose, vision and values, mission, product or service, strategies used and the target market. Although Planning is necessary to start a new business or grow an already established business, it is usually harder to plan for new business compared to established operations. This paper aims to give a reason for the assumption and identify the business with more assumptions and explain why. The paper further gives the implicit assumption that provides a shortcut in the situation.
Planning for a new business is harder than planning for an established operation because it does not have the experience to base the organizational targets. Instead, Plans are based on implicit assumptions which are uncertain and not validated (Lasher, 2017). Although planning for both new and established businesses are based on assumptions, a new business has more assumptions because there is no past record in all the business areas. For instance, competitors, customers, suppliers, financiers, and labor requirements are unknown. There are a variety of both implicit and explicit assumptions in planning for new business and established operations. However, the implicit assumption that businesses will develop a product on time and on a budget provides a shortcut for the planning of new business (Lasher, 2017). A new business has to operate within a defined budget and also distribute the products to the customers on a timely basis for operational success.
Lasher, W. (2017). Practical financial management. Boston: Cengage Learning.
by EssayRoyal, Dec. 7, 2019, 7:09 p.m.