Strategic planning gives small businesses a critical advantage in adverse economic climates according to a University of Queensland Business School strategy expert.
Informal and dynamic strategic planning by small firms has allowed some to adapt to changes in the market and respond quickly to consumer demands, helping them to survive and thrive in economic downturns.
The findings were made by UQ Business School expert Dr Martie-Louise Verreynne, who surveyed around 500 firms, which employed fewer than 100 people, across all industries.
"The general consensus has been that small firms do not engage in strategic planning," said Dr Verreynne.
"So the results from my research have been surprising because I've not only shown that small firms are actively engaging in strategic thinking, but that they have had the advantage on big business during uncertain times, such as the global economic crisis", she said.
"Small firms have been very clever in using a variety of practices to offset the disadvantages of limited size and resources to respond and adapt quickly to the market place."
Individual small firms, just like large firms, were found to use different approaches to make strategy.
Instead of deliberate, analytical and drawn-out formal processes, they tended to use approaches that were more suitable to their unique circumstances.
Dr Verreynne said, "They have been scanning the market for opportunities to develop ideas into new products and services and leveraging off a range of available resources including employees, consultants, customers, and suppliers to refine their strategic decisions."
While the majority of firms surveyed by Dr Verreynne had not engaged in formal strategic planning, those who did were very successful.
"The most successful small firms put time aside to reflect on their strategic direction, using feedback from the market place as input into and to fine tune their strategic decisions," said Dr Verreynne.
"Importantly they also used innovative ideas from their employees and empower their employees to participate in decision making."