Business Planning for Small Businesses and Startups

Business Planning for Small Businesses and Startups

While the success of any new business depends on a number of factors — the specific business model, technological advantages, the skills and talents of the management team, and competitive and other environmental factors — it is now well understood that companies often rise or fall based on whether they are able to create management systems that effectively support growth while minimizing the tension and strife that often occurs when organizations expand rapidly and confront substantial demands from external sources. There are obvious differences in the scope and detail of the management systems used by smaller companies and large global organizations; however, the basic challenges are essentially the same regardless of size.

No company has solutions for all of these areas in place at the time the business is launched, and it is common to try to address strategic issues and other growing pains through informal meetings and personal observations long after it is clear that the preferred approach is the adoption of formal, sophisticated management systems. The consequence of neglecting the task of creating management systems is that the company stumbles once it hits a certain size and is unable to take advantage of growth opportunities that can be seized by competitors that have the systems in place; an unprepared company cannot deliver on promises made to customers, suppliers and investors, and its senior managers grow increasingly frustrated with the burden of carrying out activities that should long since have become routine.

Clear and concise business strategies, coupled with management systems that address each of the areas above, are essential to facilitating coordination within the company and ensuring that necessary information is collected, analyzed and distributed to those inside the company who have a need to know, as well as to external stakeholders such as the board of directors, investors, banks and regulators. Management systems also allow senior managers to spend less time on routine transactions and focus on the big picture. Their utility for emerging companies during the start-up and early growth stages appears clear; however, there is still much to be learned about how such systems can be implemented for these companies, given that most research in this area has focused on larger, long-established firms.