The strategy payoff for smaller enterprises

Purpose – This paper seeks to examine business strategy from the small firm and enterprise development perspective. It aims to advocate the value of a well‐considered strategy for the venture for superior business performance and consider the ways in which entrepreneurs can devise, control and communicate strategy. Design/methodology/approach – Strategic thinking and planning are strongly related to small business financial performance. This is confirmed by the research reported here, that showed quite conclusively that strategic thinking is an essential ingredient in enterprise survival, performance and growth. The original research on which this paper is based, had as its central objective to investigate the nature, style, value and development of strategic management in a sample of 87 small businesses in six industry sectors based in the UK Midlands. Findings – A central finding was that the principal value of strategic planning to those firms that practiced and valued it, was that they had a framework for their assessments of overall performance. Research limitations/implications – Semi‐structured interviews were undertaken which included questions about the current fortunes, management attitudes and market position of the business. Specifically, the interviews aimed to find out: How the firm had dealt with any economic downturn: Problems arising from market changes: What major decisions were taken as a result of the problems and opportunities that surfaced: The level of satisfaction and confidence with the decisions taken and their outcomes and the value and contribution of strategic management. Practical implications – Those small firms that have survived, prospered and grown, exhibited most or all of the following characteristics: They had a firm grip on their finances. They examined business forecasts carefully and returned to the original business plan to check principal assumptions made about sales volume and cash flow. They reduced the money that debtors owed by implementing an effective credit management system and/or used factoring. Many had a pricing plan and took a strategic view when setting price. Originality/value – Strategy in the small firms that are referred to here is enacted in a highly personalised manner and is strongly influenced by the actions, abilities, personality and success criteria of the key role players. The successful firms examined here are adopting a more imaginative and strategic approach to risk.