Step 1: Identify the concept being tested.
The question asks for the importance of Financial Planning, the process of estimating the funds a business needs and deciding where these funds will come from.
Step 2: Recall why financial planning matters.
Good financial planning keeps a business ready for the future, prevents cash shocks, and links what the firm invests in with how it raises money, so operations never come to a halt for want of funds.
Step 3: State three points of importance.
First, it helps the firm prepare for future contingencies by forecasting how much money will be needed and when. Second, it helps the firm avoid business shocks and surprises, since anticipated cash needs mean the firm is not caught off guard. Third, it links investment and financing decisions closely, so the funds raised match the assets the firm actually wants to acquire, avoiding both idle funds and fund shortages.