The strategic management process for small business should incorporate the following features:
- use a relatively short planning horizon -- 2 years or less for most small companies
- be informal and not overly structured; a short sleeve approach is ideal
- encourage the participation of employees and outside parties to improve the reliability and creativity of the resulting plan
- do not begin with setting objectives because doing so extensively early on may interfere with the creative process of strategic management
- maintain flexibility; competitive conditions change to rapidly for any plan to be considered permanent
- focus on strategic thinking, not just planning, by linking long-range goals to day-to-day operations
Perhaps the biggest change business owners face today is the shift in the world's economy from a base of financial to intellectual capital.
Intellectual capital is comprised of three components:
- Human capital -- the talent, skills, and abilities of the company's workforce
- structural capital -- the accumulated knowledge and experience the company possesses. They can take many forms including processes, software, patents, copyrights, and perhaps the most important, the knowledge and experience of the people in the company
- customer capital -- the established customer base, positive reputation, ongoing relationships, and good will a company builds up over time with its customers
Small businesses must create a competitive advantage in the market.
The goal of developing a strategic plan is to create a competitive advantage -- the aggregation of factors that sets the small business apart from its competitors and gives it a unique position in the market. Every small firm must establish a plan for creating a unique image in the mind of its potential customers.
