Small Businesses Should Dump Strategic Planning

In today’s challenging business environment, it is increasingly difficult for small business owners and execs to focus on long-term business strategies for growth and opportunities when dealing with imminent organizational crises.

Every business can be identified with some critical factors that underpin its operations. Whether it is a multi-national corporation, a medium size organization, or a Sole Proprietary business, each of these has its own peculiar challenge and there is no single dosage of “get-well-kwik” prescription that fits all.

There is a mega mismatch of criterion in this instance and the reason is that majority of people are yet to come to the realization that the business planning strategy that works for mega organizations will definitely not be suitable as strategies for small businesses This misconception came as a result of business-school textbooks and theories which were majorly tailored towards large organizations and people believe that the same theory works for small businesses especially as their ultimate aim is to grow and become large. But it doesn’t work that way.

Every large organization has a responsibility to implement a working strategic business planning system that will help it stay ahead of competition and succeed in business. In order words, large companies must adopt a continuous strategic planning system, comprehensive budgeting and forecasting exercise, SWOT analysis, KPI reporting, and continuous improvement procedures to evaluate their outcomes.

When a business is suffering, the signs are usually there. Even though sales may be steady and the business owner optimistic, it’s a little like a train wreck for outside observers who know what to look for: You know it’s going to happen, but you can’t stand to look.

These businesses often have operating lines of credit and operating accounts, but frequent overdrafts, or they have a line of credit that has turned into an evergreen loan. If you’re wondering why they don’t pay their bills on time, it’s simple: They have no cash flow.

Surprisingly, these businesses sometimes struggle for years with no real direction from the person who could be their savior: their banker. Nobody tells them anything, and the banker who “wined and dined” them to get their business when times were good is now looking for a way to exit the credit, leaving the business owner confused and wondering what happened to the “red carpet” treatment.

As authorities in the business community, bankers, accountants and business attorneys should be the ones to spot the early stages of business trouble. Who else is as close to a business’ financial condition? The best way to spot potential business failures is to look for early signs of financial trouble, such as late or inaccurate financial statements, evergreen lines of credit, increasing A/P, and slow-paying A/R (e.g., an increasing amount of A/R that’s over 90 days).

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