Any new business takes a risk in starting, but according to Patricia Schaefer of the website Business Know-How, a lack of sufficient planning is a major reason why new companies fail soon after being founded. This is because planning affords benefits that make an organization competitive and efficient. Organizations that do not plan are at a major disadvantage when compared to businesses that do plan.
Vision and Purpose
When an organization plans well, employees at all levels know what the vision of the company is. They know what their work is supposed to achieve and how it is contributing to the short-term and long-term goals of the organization. Subsequently, employees have a sense of purpose as they work, which can improve employee morale.
In any organization, difficulties are bound to arise. Management has two choices regarding those difficulties. It either can deal with difficulties as they arise, or it can predict which difficulties are most likely and prepare for them before they happen. The first option isn't desirable because it takes time for management to gather resources to deal with the problem. When an organization anticipates problems given its situation and goals, it is able to ensure that the resources necessary for resolving the issues already are in place. This means the organization can deal with a problem more quickly and minimize its impact.
Funding and Support
When an organization looks for funding, volunteers and other forms of support, those who provide monies or other resources want to have evidence that they'll see some kind of return on their investment. Planning shows an investor or donor why the organization is likely to succeed and therefore can increase the likelihood that the investor or donor will see contributing as a safe venture.
When an organization plans, it has an idea of the goals that the business and its employees need to meet. These goals provide a starting point for management to evaluate whether the organization is successful. For example, if an organization knows it needs $1,000 and sells shirts to raise funds, it knows it has enough money for its objectives if it sells $1,500 worth of shirts.
Clarity and Cooperation
Often conflict and lack of cooperation arise in an organization because those within the organization are not clear about what organizational members are supposed to do. Planning eliminates this problem because it creates clear job roles and expectations that align with the organization's overall goals.