A Small Business Blueprint On The Strategic Planning Process

Strategic planning is technically characterized as being the overall purpose and scope of how an organization will achieve its objectives, or simply put, meet the owners expectations.

Texts written by authorities on strategy like Johnson and scholes appear to be aimed at the larger company environment. They outline relatively sophisticated and formal planning processes of the kind which are likely to prove cumbersome to a smaller business (small and medium-sized enterprise) environment.

This page will instead focus on the less sophisticated strategic planning process for small and medium businesses, a process that might identifies relevantly with your business objectives.

Find out how Your certified accountant will be of use in helping you understand and apply the different guiding tools designed by authorities on strategic business management such as Professor Porter, Ansoff and others.

A Case for Small Business Enterprises

Small businesses are more likely to be characterised as having ‘emergent’ as opposed to ‘deliberate’ strategies/rational strategies.

Emergent’ strategies are strategic plans which can be inferred – usually looking backwards, or arising out of a pattern on a series of actions or divisions.

They also tend to be even more incremental in the way one strategy leads to another – so that there is relatively little grand design and even less thinking about the longer-term or medium-term future.

The small business strategic planning process is often different because it is even more determined by the personal agendas and strategic biases of its top team/leader/owners. Personal agendas from owners are likely to pose particular difficulties, especially as the normal mechanisms for top-down/bottom-up and horizontal development of strategy that we see in some larger organisations either don’t happen, or are very partial.

Whilst most small business enterprises will often have it amongst them selves(on their conscience) that they need a business “strategy”, their strategy is often characterised by:

• being a simplistic vision (which is not necessarily grounded in tangible, competitive advantage);
• being more of the nature of objectives, rather than spelling out the ‘how’;
• being insufficiently broken down by different produce/market segments;
• is mainly just in the hand(s) of a small number of individuals – so that unless they are brilliantcommunicators, other managers have to be near psychic to get at it;
• is translated into wishful financial projections which are usually simplistic and medium-range only; and,
• ones which focus on profitability measures, rather than the economic value (cash flow generation potential over time) capability of the business: this means that potential exit values, on sale of the business, are not frequently factored in.

So there are many gaps in how most small business enterprises approach strategic planning. Once filled, these can add considerable value to the management team.

Never the less, the emergent strategic planning approach comes with fundamental bonuses:

• It allows the company and its owners to develop strategy quickly during periods of rapid change.
• It uses the skills of entrepreneurial business owners who do not feel hampered by a long rational process. For example, as a business owner, you will be in a better position to understand and respond quickly to the needs of your customers without having to refer to standard models.
• The flexibility makes it cheaper to develop business strategy than the rational strategic planning process.

So let us now examine some of the commonalities with the mainstream rational strategic management process. These are key in helping to work at growth of your business unit and include:

Strategic Analysis:

• the bigger picture environment has an impact (e.g. ‘PEST’ factors – political, economic, socialand technical);

• growth drivers, within the market, will impact on the sales of the smaller business enterprise;
• competitive pressure (rivalry, entrants, buyer power etc.) will affect its margins;
• superior, average, or inferior customer value will affect its market share (volumes), prices, and margins;

Strategic choice:

• You need to break down the strategic planning evaluation e.g. into specific product/market areas;
• Create it step-by-step, rather than doing it in a single thought – in order to be effective (e.g. the diagnosis, option generation/evaluation, and detailed planning phases

Strategic Implementation

• Make some consultations both to check implementation feasibility, suitability and acceptability
• Make some form of business plan for investment decisions;

The strategic role of an accountant

The role of an accountant, to your strategic business development process, can take a variety of forms:

• helping you interpret strategic issues and tools, and moving them into action;
• giving you support at a multitude of levels including cognitive, educational, political, emotional,through different styles;
• facilitating your thinking/strategy away, say through workshops and business retreats;
• guiding you through growth transitions to new phases of development;
• helping you to refocus your business on higher value addition–creating activities.

As your strategic planning adviser, the accountant will provide help in terms of Managing transitions through the various phases of the growth of your business.

Strategic business planning is a highly specialized area and we highly recommend contacting your certified accountant for support. You may also contact us, to assist you in drafting a case study for you individual needs.

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