Can anyone give me a valid excuse why small and medium enterprise does not take the time to properly plan and to develop a strategy for their business. I have now come across another business that has not taken the time to plan and develop a strategy for their business.

This is 90% of my work, trying to rectify a business that is on the verge of failing due to the lack of planning.

I realize that the duality of planning and action plays a role, but come on. explain to me why people would just bugger ahead hoping for the best.

__________________
Henk Heath
MBA (NWU)
Lohesi Investments cc

You've got to realise that not everyone who goes into a business has a business mind set. They may not realise the importance of many important tasks such as setting strategies, defining objectives and goals to achieve, cash flow forecast and management. These can all seem pointless daunting tasks to people who'd prefer to be out their "making" money. Some people need guidance and advice on these things

Another reason is that most new business owners do not actually know what business they are really in. They think may they are in "web design" (or whatever), but they are actually in communications and marketing -- the "web" part is just the current activity of the moment.

Also, many new businesses start as one thing and then quickly or slowly morph into something else, sometimes completely different. This can be both good and bad, all at the same time. Sometimes you have to follow the money; if your customers like your products and your service they sometimes ask you to help them with different products/services .... then then (if you choose to) you are off an running in a new direction.

In my company (we sell a type of collectibles), there are areas of the business that were once small sidelines that started when we purchased large collections that included material outside our core area of specialty. Some of those small sidelines now threaten to be much larger (and profitable) than the original core specialty -- this causes a lot of re-working of marketing, website design, etc., etc.

It is exactly for this reason that one should have a strategic business plan as a working document. It will assist you in determining the GAP in your business as it relates to the GAP in the market. You could then properly plan how to best to implement the desired actions, derived from the GAP analysis.

__________________
Henk Heath
MBA (NWU)
Lohesi Investments cc

I am missing your meaning of GAP. I know about GAAP, but I don't think that is what you mean. Wiki ( en.wikipedia.org/wiki/Gap ) is not helping. What do _you_ mean by GAP?

Besides, are you suggesting that a business should _only_ be run in accordance with the original strategic business business plan? While I agree that there should both be strategic and tactical plans, it seems to me that one must be open to opportunities (either buying opportunities, new technologies, or new customer demands and suggestions) to maximize the potential of whatever level of business one has managed to acheive. I know it is too easy to get fragmented in irrelevant directions, but I think the challenge is to notice the opportunities and decide which (if any) are beneficial to the company and could result in an order of magnitude increase in the company's [sales | expense reduction | quality | profit].

As you said, oppurtunities should be looked out for as these are what allow businesses to be created, survive and expand. But if you read the initial post here, we're talking about businesses that do not have a strategic plan. Therefore, with no set guidlines it will be way too easy for such a company to spot what they classify as an oppurtunity, but compared to their initial Aim of their business it's just a distraction. Of course such oppurtunities could be classified as diversification to reduce overall risk to a firm, yet if they don't have a strategy for the original business then a diversification business is not likely to be organised well and actually capatalise on this oppurtunity.

just learning !

__________________
hugo
www.niceindustry.com
Manufacture many kinds of pvc bags,fashion bags,shopping bags ,gift bags,sports bag,travelling bags,cosmetic bags,shool bags,stationery bags,wallets,purse .

For many small businesses the only strategy is to go ahead until the sales revenue of production outweigh the costs.
I know companies at year-end are forced to buy anything to increase the production costs. Otherwise should declare too high profits.

The first step is to keep costs under control.

Then we should plan a strategy to increase the profitability of the company.

__________________
Sigi Dufree
www.eLozistic.com

Elozistic,

It depends upon what you mean by 'buy "anything"'. Since you referred ot increasing the production costs, that suggests that the items purchased are raw materials for the production of the product.

I do not know what country you are located in, but in the U.S., the situation you describe usually only applies to companies that are "cash basis taxpayers". If a company uses the accrual method of accounting, then the purchase of raw materials (or anything else that it is categorized into "cost of goods sold") does NOT affect the profitability just because of an arbitrary year-end cut-off date.

However, of course, if you buy items that can be "expensed" directly and immediately, then you can (temporarily, for the purpose of the year-end) reduce the profits.

An exception, in the U.S., is accelarated depreciation. If you purchase a $100,000 machine, some large amount (I don't recall the current details) can be expensed immediately. The remainder is then depreciated (thus expensed) over several years.

I am not aware of any "good" reason for a business to be a "cash basis taxpayer". It just results in imposing artificial date constraints on your activities, when you should instead be focused on doing what is right for the long-term health of the business.

sometimes, i will face the same worry as you, but, now, its ok,

__________________
we use our ability and loyalty to boost ourselve travel around all over the world with business,
www.loyalco.net
Email: loyalco@hotmail.com
James