Abstract
An essential ingredient of small businesses is business planning. It is perceived to be vital by both governments and business support infrastructure, such as the Business Links (Beaver, 2002, p88). On similar lines, O'Gorman bases his idea on the fact that one approach to developing a successful strategy could be to engage in a formal planning process (2000, p291). Although planning is an essential tool that is frequently used and implemented in large corporations, it relies on different means for coordination and control in SMEs, due to differences in scale. The extensive research on corporate strategy is not relevant for small businesses since they are more driven by new opportunities and strive to minimize their commitment to resources. (Stevenson and Gumpert, 1985, pp 86-87). This paper evaluates the statement of O'Gorman about the impact of planning on a successful strategy for small and medium-sized firms. Firstly, we will analyze the notion of planning for SMEs in formulating their strategy. In the second part, the paper will present the reasons why in reality owner managers of small businesses do not engage as formally as managers of large corporations in the planning process. Finally, the paper will evaluate the considerations presented to clarify the initial hypothesis.
