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Resource allocation is a crucial step in business planning. It involves working out exactly which resources your business is going to need to achieve its specific objectives. This may be:

• financial resources, ie cash
• equipment or fixed assets
• people, including staff, suppliers or other valuable relationships

You will want to detail your resource requirements in your business plan. Potential investors and business partners will be particularly interested in this before getting involved with your business.

What is a resource allocation plan?

As part of your business plan for growth, you should specify clearly and thoroughly how you will allocate resources to make your growth strategy work.

Describe each resource that you have or need, their position in terms of their value, and their role in helping you meet your business objectives.

If you don't already have these resources, describe how you will generate them by future activity. For example, by:

• recruiting more office staff
• spending more on marketing
• buying more supplies or equipment

Changes in the market could present increased opportunities for a certain division. Maximise on this by making sure they have enough resources to increase their activities.

How do you allocate resources in business?

You may want to provide funds through current cashflow, generating more profit or seeking external funding. It's always better to fund future growth through revenue generation.

Draw up a business budget to decide the level of resourcing for each department. It's important that you prioritise resources. Make sure that you allocate enough funding to key business areas to achieve overall goals. If funding isn't available, you may need to make cutbacks in other areas.

Review your progress regularly and identify problems with resource allocation early so you can take corrective action. See how to review your business plan.