Business planning is one of the most important steps in determining the success and failure of the business. It is more efficient to run a business entity through a blueprint rather than working without any guidance which can be risky as the firm can loose direction and its sense of objectives. Good business planning can guarantee achievement of the objectives and can be modified from time to time to remain relevant.
However, planning errors or mistakes may arise due to some avoidable or unavoidable reasons, which may affect the projected plans of the business even lead to failure of the entity. In case of errors necessary controls should be taken on due time or implemented properly. Nevertheless, some of the business planning errors cannot be erased completely and require careful execution to avoid more adverse outcomes.
Proper implementation of certain controls can somehow compensate for the errors made in business planning. The company can rescind some of the contracts that it had engaged in with other partners although some of the contracts are irrevocable and cannot rescinded them, and the firm must bear the remedies for breaching the contract or just incur the unnecessary costs on the contract depending whichever way is cheaper.
An organization can update its business plan model as a control measure in case an error occurred in the process of planning. The plan can be modified from time to time to remain relevant with the current business times. The company should conduct more research on the issues derailing its operation’s plan and get more informed management team to come up with the updated plan. The updated plan should correspond to the current environmental occurrences and adjust the operations to suit the company’s mission and vision.
The company can wind up if the planning errors made would likely hinder the operation from attaining its operations in the short or medium term. Winding up can be an expensive venture but if it is unavoidable and the eventual outcome of the firm in the long term it is better made at the moment than in the future.
Take an example scenario, whereby a firm had planned on overambitious production target for its products; this was made with an oversight of an increase in demand of the company’s products in the next period. The production targets are been constraint by diminishing demand of the products and an escalation in production costs.
As a result a lot of production costs and production overheads have already been incurred. In the second quarter of the projected period, although the supply of the company products is has increased, the demand for its products is still low. The company needs to control before it is too late.
The company can come up an updated plan for the period as a control measure. The updated cost will put into consideration the prevailing firm’s environmental times and make necessary adjustments to the projections. The plan should focus more on marketing more its products, reducing production and improved internal control systems. However, the updated plan should not short change the firm from its objectives but only serve as a controlling measure.
The company can reallocate the excess resources allocated to the production department to reduce the underutilized resources. The company should focus more on marketing its products rather than production but also ensuring the demand limits are met. The company should renegotiate some its contracts if it possible to suit its operations. Although, in some cases it will be required to pay for remedies for breach of the contract, but if it is the best alternative it ought to do so.
If worse comes to worse and the company cannot carry on its operations normally due to the huge costs already incurred and most likely it cannot go back to profitable operations, it can opt for winding up its business. This can mitigate the costs from accumulating and the decision has to be taken at the earliest instance, if winding up is the eventual outcome. This will halt the firm’s operations and lead to liquidation of the firm.