November 11, 2008

Strategic Planning, Implementing Strategic Planning in Small Business

“The vast majority of small business owners do not plan”, reviewing studies that conducted in the strategic planning field leads to the conclusion, that we can regard this statement as a ruling. But why is it so? And is there something that can be done? The fifth article in the series tries to answer these questions.

The status in which the vast majority of small business owners do not engage in any sort of strategic planning can be attribute to two different factors: First, the lack of time that every small business owner face, which exists mainly because of the centrality of the small business owner in the day-to-day management tasks that are crucial for the maintenance of the small business. Second, the skills, or lack of skills, to establish a profound strategic planning process that will evolve into strategic plan that will lay out the small business goals and objectives and the necessary resources needed to achieve those objectives. Such skills are not as common even for large business top managers, but contrary to small business owners large business top managers do have the access to professionals in the field of strategic planning and the necessary resources to hire them.

In light of this it needs to be asked; do all small business owners sentenced to lag behind their corporate colleagues regarding strategic planning? Is there something that the small business owner can do in order to narrow the gap?
Small business owners will never have the necessary resources needed to close the gap with large businesses regarding strategic planning process and implementation. But frankly I don’t think that they should put neither their time nor their money in the elusive quest to narrow this gap. Small business owners should understand that small businesses are not large businesses as for their abilities and resources and adopt different approach toward strategic planning that can be implemented not only in a rigid form which dictate an exact formula that delineate for the small business what to do and how to act at every possible situation, such approach opens a whole new set of alternatives to engage in some sort of strategic planning, from which the owner and its small business will be the main beneficiaries.

My suggestion for a different approach toward planning based on differential sophistication and time length of planning.
A five stages ordinal scale defines planning sophistication: 1. Defining objectives and goals. 2. Selection of strategies required for achieving objectives. 3. Assessment of resources required for implementation of strategies. 4. Procedures for identifying and preventing failure of the plan implementation on a continuing basis. 5. Attempt to account for factors outside the immediate environment of the firm.When a decision is made by the small business owner to set the planning bar on one of the five stages, the commitment than is for the chosen stage and all stages beneath it. Now that the decision about planning sophistication is behind us, it’s the time to define the time length that will be covered by the planning process. Three possible time lengths – one year, two years, and three years – define an increasing level of commitment to the scope of planning. It’s important to understand that no matter which combination of planning – sophistication, time length – is been chosen, the plans must be written in order to acquire the needed commitment for achieving the full impact.