Strategic Planning, Analyzing the Differences between Small and Large Businesses

Through a discussion about why and how strategic planning in small businesses is different then in large businesses, this third article in the series is been used as a passage from an overall discussion regarding strategic planning to a targeted analysis focusing at strategic planning in small business.
Till the mid seventies a small business was considered as a large business regarding the managerial skills needed for its success. From the mid seventies we can note that scholars make the distinction between small and large businesses in terms of the level of sophistication and the scope of strategic planning.

Hofer (1975); Lindsy and Rue (1980) argue that the size of the firm is a significant indicator needed to take into consideration for designing an affective strategic planning. Furthermore, strategic planning as implemented in large firms doesn’t guarantee a similar results for small businesses and it may be inadequate for them. Welsh and White (1981) claimed that despite the common assumption among managers that small business can be regard as large business – except for smaller sales, assets, employees – here is that small businesses need a specific guidance for operating its managerial skills. Thurston (1983) wrote that managers in small businesses could adopt several approaches, starting from non-formal planning without written plans and ending with a fully formal planning that includes written plans.

Reviewing the way strategic planning is implemented in small businesses strengthen the notion about the need for unique approach toward strategic planning in small businesses. Hestings (1961) studied planning difficulties and implementation in 106 manufacturing firms. He found that in most firms planning was not formal. Moving forward the planning process caused major difficulties, likewise to allocate the necessary time for it. Still (1974) investigate the approach toward strategic planning in ninety-two firms from manufacturing and construction industries. His findings were: 1. Strategic planning was implemented in irregular and incomprehensive way. 2. The planning was not methodical. 3. Few people took part of the planning process. 4. Very occasionally the firm’s goals were taking into account. 5. The search for alternatives was with no inspiration and the tendency was to limit the search for more alternatives as soon as a good alternative was located. Cohn and Lindberg (1972) studied 106 small businesses and ninety-one large businesses in order to locate and define the differences concerning managerial aspects, findings reveled: 1. Planning was the hardest procedure for implementation. 2. Setting goals was the weakest procedure in small business planning. 3. Planning in small business consumed considerable amount of time. Shuman (1975) examine long-range planning in forty-one manufacturing firms, findings were: 1. Planning was informal, inconsistence and unstructured. 2. The planning based on insufficient and inadequate data. Robinson and Pearce (1984) ascribe the lack of strategic planning in small businesses to a limited knowledge in the planning process, lack of time, expertise and trust. Sexton and Van Auken (1985) reported that only a minority of the small businesses engaged in strategic planning, these that did plan showed instability and inconsistency with keeping the planning process over time.

To summarize the above, small businesses have a problem with the implementation of strategic planning due to lack of time, knowledge and expertise. When planning do carried out its output is insufficient and incomplete. Strategic planning in small businesses should take into consideration the strengths and weaknesses, competencies and disabilities of the small business.
The forthcoming articles in this series will enhance the discussion about strategic planning in small businesses in two aspects: 1. Do the implementation of strategic planning in small businesses affect the level of performance. 2. Tailor made step-by-step strategic planning for small businesses, an operative suggestion.