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So, why is business planning so crucial? In a word, it provides "clarity". Investing time to develop a plan provides precise clarification of the company vision to both employees and customers. In addition, it provides a mechanism to gauge the results of the business and provides the foundation for future growth plans. In the long haul, it enhances the company valuation through fiscal responsibility, which provides the story of opportunity to any future investor or employee. In short, the benefits of planning allow the company to articulate a common vision to align resources and make an efficient use of investment dollars. A company that is perceived to be a "well_oiled machine" is attractive on many fronts _ both externally with investors and internally with employees through job satisfaction and increased tenure.

Variable expenses are those expenses that track directly with sales. If sales stop they stop. These are expenses like supplies used to support in the making of your product or doing your service. Such things as shipping cost for raw materials for your product or service. If you have no sales then you're not going to be purchasing materials so your shipping cost for those materials will stop as well. As an example, if you have a lawn mowing business and there are no lawns to mow, then you wouldn't be buying gasoline to travel to your lawn mowing site. These kinds of things are variable expenses. If you're producing a product, it would include supplies used to produce that product like sand paper, glue, finishing materials, cutting tools, etc.

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