Entrepreneurs establish businesses to produce a commodity or render a service, to fulfill scarcity in the market. The organizational goals that these businessmen set for themselves describes the purpose and vision of their commercial ventures. The strategic growth plan that they devise and implement is a vehicle that helps them to accomplish their mission. This scheme goes a long way in assisting to achieve the competitive advantage in the markets they conduct their operations. It also assists in defining the relationship these proprietors establish with their clients, employees, stakeholders, investors and competition in the market.
Benefits of strategic planning
Steve Sorensen , a prominent business expert, says strategic planning is just as important for small business enterprises as it is for large corporate entities. An effective strategic plan for growth can help such organizations focus their attention on carrying out profitable activities that sets them apart from their competitors in the market. It aids in expanding their customer base and sustaining a competitive advantage in the business environment in which they carry out their operations. He explains that such schemes go a long way in implementing innovative ideas that form the cornerstone of business enterprise’s vision and mission in the market.
This prominent strategist points out the four essential advantages of strategic planning for small business enterprises:
- Creates a road map for the future
Strategic planning assists in defining the vision of a business enterprise and devise realistic goals, which are in line with its mission in the market. It provides a foundation from which such an organization can progress and establish the basis for effective decision-making for its entrepreneurs.
- It to make prudent business decisions
Effective strategic plans help entrepreneurs of small businesses differentiate between a good and great idea. Without a proper vision of what they want to achieve by establishing the commercial venture and means of accomplishing this mission, every proposal will look identical. It is important for such businessmen to know what project they want to invest in and why. This will help to them to focus their limited resources in the right direction.
- Increase profitability and market share
Strategic planning helps businessmen to focus their efforts in creating a unique product or render a services at a competitive price that caters to a scarcity in the marketplace. As the demands for such a commodity or service in such an environment is high, it helps to increase the revenue of the business enterprise and expand its client base. Moreover, it assists in enabling the organization to gain the competitive edge in such market.
- Enhances the longevity of a business enterprise
In the marketplace, industries are constantly changing and businesses that do not have an effective growth strategy tend to lag behind. An effective scheme to take advantages of opportunities such an environment offers while overcoming the potential risks can help such organization survive and strive.
Steve Sorensen clarifies that strategic planning helps entrepreneurs of businesses to make a name for themselves in market in spite of the presence of large companies. This is in addition to the above benefits.