According to Bucad (2002), planning must precede any action to be done by the company. It is a step to looking ahead, hoping to prepare for future events. A planner is usually confronted with possible events that might take place in the future. However, effective corporate planning should be based on facts which are properly analyzed in order to make a good forecast.

In general, budgetary planning precisely defines your business, identifies your goals, and serves as your firm's resume. The basic components include a current and pro forma balance sheet, an income statement, and a cash flow analysis. It helps you allocate resources properly, handle unforeseen complications, and make good business decisions. Because it provides specific and organized information about your company and how you will repay borrowed money, a good business plan is a crucial part of any loan application. Additionally, it informs sales personnel, suppliers, and others about your operations and goals.