Requirement of Good Financial Planning for Growth

You might have seen that many technically sound and economically viable projects failed simply because of poor financial planning. Therefore, it is an essential tool for any business undertaking.

Financial planning is deciding in advance the course of action for the future in respect to the financial management of a business enterprise. This involve following steps:

(i) Estimating the amount of finance or capital required.
(ii) Determining the forms and the proportionate amount of the securities to be issued

for raising the capital.
(iii) Laying down the policies as to the administration of the financial plan.

Why Financial Planning?

Financial planning is required not only in case of enterprises proposed to be set up, but is equally required for running enterprises as well. The requirement for financial planning arises for the following reasons:

Good financial planning:-

- Would ensure liquidity throughout the year.
- Would bring to light the surplus of funds available for expansion.
- Would contribute to rational utilization of the available resources to get the maximum benefit.
- Would make things easy for the management to function smoothly