Financial planning means creating and employing plans to meet defined financial objectives. The firm must decide in advance how it will arrange funds for its working capital requirements and for investment in long term assets. This process of estimating the fund requirements of a business and determining the sources of funds are an important part of financial planning. Financial planning takes into consideration the growth, performance, investments, and requirements of funds for the business for a given period of time. It provides a detailed plan of action for reducing uncertainty and for the proper direction of individual and group efforts.

For an individual, financial planning means deciding in advance how much to spend, and what to spend on, based on the funds at his/her disposal. This includes tax planning, investment planning, insurance planning, mortgage planning, retirement planning, and savings planning .There are a wide range of investment opportunities available to the public. People are often confused as to which is the best choice to suit their budget. The funds available must be prudently invested. One has to consider the profitability, liquidity, and safety of the various investment opportunities before investing in them. Investment of funds in fixed assets has long term implications as the funds would be blocked for a long duration and their benefits could not be realized in near future. The planning of an individual?s finance involves a careful study of the current economic conditions. This enables them to plan their financial matters efficiently and achieve their financial goals successfully.

Nearly every successful business has created a business plan or two within the life of the company. These plans can be used for a variety of reasons, but are most commonly brought to life when the business is seeking funds. This may be through fundraising, a bank loan, or seeking out individual investors, but the business plan shows how and why investing in the business is a smart financial idea. Of course, not all business plans are created by those businesses looking to turn a profit. Non-profit businesses also rely on these plans to raise funds; though they will usually focus on the services and social good their business will do, rather than a bottom line financial consideration.

Business plans are a must for the small business owner, looking to gain capital and seeking loans from lending institutions. They are likewise necessary for those publicly traded companies that need to let stockholders know what their plans for the future are. Even if neither of these is true, business plans are an excellent way, even internally, to set down goals on paper and give a direct path of success to a business or company.