Business planning and budgeting – why is it important?

Business planning

A business plan is an essential tool when you are setting up a business. You will need it to help you and your potential team plan and oversee all possible business-related activities.

One of the cornerstones of an efficient and productive business is consistent planning and the setting of strategic objectives. These goals must be concrete, carefully planned and realistic, but at the same time sufficiently challenging.

A good business plan is one that clearly shows

  • the company’s activities
  • Environment
  • Earnings logic

The decisive factor is not the length of the business plan, but the fact that the entrepreneur can be seen to be as familiar as possible with the intended business. Without a proper business plan, many things are likely to be overlooked.

Business plans are criticised for being little more than “visions of the future” and are mainly designed to impress other people. In reality, the main purpose of a business plan is to help reduce risk and unnecessary stress for both you and your team. A business plan organises and records all the important details of your project so that any weaknesses can be quickly identified and corrected.

A business plan is comparable to an operational plan. It needs to be regularly updated and continuously developed.

There are many guides to business planning. Many of them are available free of charge from banks, for example. Help and tips on how to prepare a business plan are available from start-up centres, for example, or at https://www.suomi.fi/yritykselle.


Managing the finances of a business requires careful planning and active monitoring. The budget is a financial plan of action for the future activities of the company. Budgeting, on the other hand, refers to the actual preparation of the budget. The budget period is the future period for which the budget is prepared. The most common budget period is either the calendar year or the accounting period, which can be divided into shorter observation periods if desired.

It is recommended that the budget should not be seen as a mere forecast or estimate of the company’s future finances, but should be an active action plan aimed at achieving the most profitable financial results possible. When financial targets are set at an appropriate level of ambition, it is more likely that a better result will be achieved than if the targets are modest or non-existent. On the other hand, if you are just starting a business, when planning its finances you should be cautious in estimating future revenues and costs, so as not to base your business on overly optimistic and unrealistic expectations. A company may have several different budgets, which together form what is known as a company budget system. The profit budget is the main budget that forecasts the company’s