Reasons why strategic planning is important to a small company
Strategic planning is a logical process of envisioning a desired future in an organization. It entails the translation of this vision into well-defined goals and objectives together with the steps to achieve them. Strategic planning involves the matching of the company’s strengths to the opportunities available. To successfully achieve this company should collect and analyze all the available information relating to the business environment. A company should perform a SWOT analysis so as to understand the organization’s strengths and weaknesses. A clear mission, vision, objectives and the company’s goals should be precise.
For small businesses to thrive, it is essential for the management of the company to be aware of the business environment and have the ability to assess the implications of any change within the organization. This change encompasses the ability of the company to make timely adjustments, environment awareness as well as being aware of the implications of any strategic action within the enterprise is far more important in small businesses than just a formalization of the level of awareness and thinking. A majority of owner-managers are flexible and reactive and do not have a particular time horizon. Their decisions are affected by personal judgments and hindrance from the lack of knowledge of the market, customers, policies as well as technological changes. Managers of small businesses do not always consider alternative ideas in advance in cases where the strategic plans are harder to implement. They tend to shift to other ideas and make adjustments to their initial plans in cases where they experience a change in their resource base as well as the business environment.
Strategic planning is an important tool for small business because of its positive effects on the performance of the firm. Strategic planning provides a framework for decision making which assists the small businesses in acquiring a long term view. It gives a company a chance to prepare for changes in the business environment. Furthermore, this tool helps a small business to yield objectives that set criteria against which the company can measure its attainments. In most cases, the majority of enterprises often adopt a more formal planning process, the extent of strategic planning applied by the company helps in influencing the rate of growth of the business. It also provides a critical framework for increasing company’s growth as well as maintaining the capability and existing size of the enterprise.
The integration of strategic planning in small businesses helps in providing a sense of direction and provides an outline of all the measurable goals. It helps in guiding the company’s decisions and evaluates the progress and adjust any change in approach as the firm moves forward. By integrating strategic planning in a small business, the management will be able to perform a periodic assessment of their performance regarding where they are and where the company expects to be. The result of this process provides a plan of action which the company can take whenever a change in the business environment occurs.
In conclusion, a strategic plan is important to small businesses because it helps in the overall performance of the company. Managers become well equipped with ways in which they can adapt to changes in business environment. The condition of the company and the level of preparedness to adapt to change are critical indicators that a business can thrive in hard conditions.