Strategic management is especially important for small and medium enterprises. Though they specialize in narrow niches in the market, SMEs employ more than a half of all private-sector employees in the US and make up more than a half of its GDP. At the same time, small companies are less protected than large ones, and new ventures often turn into a failure or meet low profit margins. Due to their small size, formal strategic planning can be missing in SMEs, which inevitably affects their corporate performance.
Strategic planning always develops together with the enterprise. From the moment when a founder creates a new venture, they make up a basic plan on how to implement their goal into life. This strategy is not always explicit and it usually exists as the manager’s general thought. As the idea and the range of people performing it expand, it turns into more formal and elaborate business plan. It summarizes all information relevant to the enterprise and serves as an agenda for potential investors.
An average business plan usually contains some general information as well as specific details. The company’s background and personal profile of its founder are hardly of any value to the current employees but they are essential for external stakeholders. The plan also specifies the product, marketing details, financial issues, and the timetable for implementing all mentioned above. Compiling a business plan is a rational activity that allows the entrepreneur to make a larger profit for their company.
Writing a business plan is of a great importance to the strategic planning of SMEs. It enables better financing and control, and make the enterprise united with a single idea. Nevertheless, many businesses lack strategic planning that undermines their position in the market. To improve this, governmental and educational institutions shall provide more training of strategic thinking for already existing and new enterprises.