Need for Strategic Planning for traditional small SME/partnership / business groups and Family businesses.

Most large corporations have a structured process of preparing Strategic vision plan, some may be 10 years or 5 year plans made after a detailed visioning and Strategic planning sessions. These are then cascaded across the organisation and reviewed at regular intervals. Some organisations use Balanced score card approach (A tool for monitoring the strategic decisions taken by the company based on indicators previously established) which addresses four aspects – financial, customer, internal processes and learning & growth.

However, after discussions with few traditional small SME/partnership / business groups with multiple businesses, they do not have any structured process for deriving their strategic plans nor is there any periodic review process. The new era Start-ups funded by venture capitalist or other funding agencies may, by design, required to prepare these and review these regularly.

The traditional small SME/partnership / business and family groups need to start incorporating few critical Management processes in their business process such as :

1. Strategic Visioning Exercise: Even though the group members may be meeting off and on, they never hold any formal strategic planning or Visioning exercise. A structured exercise may be useful to list the ideas, discuss debate and clarify the thought process and aligning everyone to common vision and strategy. (Strategic planning tools such as PESTLE analysis/ SWOT analysis etc maybe be useful to begin with)

Sometimes, a structured planning exercise helps in clearing the cobwebs in the minds of key stake holders. For example, a detailed analysis of ingredients of the existing business may reveal the one of the key Strategic factor /the Unique business critical factor for your business.

This one unique factor may “make or break” the growth of business soon. Often it may turn out that competitive advantage in IT system or procurement process or R&D process is that unique factor. A significant investment in this unique competitive advantage factor maybe the need of the hour. Example, a small NBFC may soon realize that it needs to be more a IT company than a mere NBFC or Finance firm!! Unless its IT and digital systems are very strong, it may not survive as a NBFC or Finance firm. A superior IT and Digital systems may in turn help it acquire new customers and also ensure customers, employees and other stakeholders remain happy and generate superior profitability and customer satisfaction.

Similarly, some other businesses may realize their unique strength needs to be in Procurement process or subcontract or vendor management or R&D or Digital processes. Business models are fast changing, example the concept of cloud kitchens or a cost effective hub and spoke model or different models of engagement of employees or Web based banks and NBFC’s are the emerging trends. SME’s and Small partnership groups need to critically review their business model and plan for their strategic direction accordingly.

1. Regular review of progress achieved against these strategic plans /blue print for future. In absence of a shared vision and plan, problems and differences of opinion among key members could be common.
2. In these traditional small SME/partnership / business groups, any differences and disputes needed to be handed very sensitively as family /partner relationships are highly valued. This calls for a seasoned external consultant or internal consultant or godfather figure to resolve and iron out differences.
3. Partners/ Family concerns and preferences can influence the choice of business strategy and often make the partners / family reluctant to embrace more formal goal-oriented discussions and decisions. Further, Partnership/ family considerations can limit the strategic aggressiveness of the group/ firm.
4. The group often ventured into some businesses due to adamant nature of some partner’s/ family member. Maintaining personal relationship balance could have been key to survival of the group. The whole concept of shared common vision and detailed strategic plan etc could often goes out of the window.
5. Due to lack of a common strategic vision for the group, members often venture into new businesses which dissipate the time, money and energy of group members.
6. While various partner’s /family members may be qualified for similar tasks, due to lack of division in roles and responsibilities, there could be conflicts. Big decisions could be made together, but a debate over each little move could often bog the group’s agility and decision making process.
7. Group member’s expression of views and observations on every trivial aspect of other group member’s business hampers and constructive decision making process. Tendency of some group/ family member to reprimand employees who don’t report to them leads to resentment among employees as well as members/partners. Tendency among some group members to create loyalty to themselves among employees soon leads to divisive groups among employees. ?These employees then are aligned to one family member or other and internal politics and backbiting come to fore. Sooner or later such traditional small SME/partnership / business groups disintegrate.
8. Too much emphasis on “family”/ partnership and not enough on “business.”. A healthy business may not always be compatible with ideals of family /partnership /group member’s harmony. More aware the family/partners /group members are about it, it becomes easier to address these issues and quickly move on for greater good.
9. Art of treating “family members”/ partner’s/ Group members fairly.?A great amount of caution may be necessary while hiring family or relatives of Partners / group. Qualified family members can be a great asset but good care needs to be taken in terms of their placement to avoid favoritism in terms of pay and other terms /work schedules etc. Unlike a corporate sector company, hire and fire decisions are not easy in traditional small SME/partnership / business groups.
10. Need to put business relationships in writing.?In absence of a clear business plan and clear communication regarding compensation, ownership shares, duties and other matters, things become tricky.
11. Nepotism: Tendency to provide “sympathy” jobs for family members.?It is not uncommon to find the group employing several group member’s kids, cousins or other family members.
12. Reluctance in seeking outside advice.?There could be fears in seeking outside advise due to trust issues or fear of exposing internal conflicts among members etc. However, it may be very essential to show the group members a mirror to reflect upon and allow for fresh ideas and creative thinking. Reality check from time to time may be essential.
13. Proliferation of numbers of business: the group often ventured into several unrelated businesses, maybe as a strategy not place too many eggs in one basket or may be due to pressure or interest of some members. The desire of the next gen group members to remain outside clutches of existing group/ family members may be one other reason for such unnecessary proliferation of business. These leads to inefficient deployment of scare capital and other resources leading to suboptimal performance of the group business overall.

A regular (once in a year or once in two years at least) Visioning / Strategy session exercise among board members or key Partners is a must. They must review the SWOT for each of the business. A review of every product and service offered by the group may be using a structured BCG matrix or any such analysis tool may help traditional small SME/partnership / business groups.

The traditional small SME/partnership / business groups members need to realize their survival depends on adopting and incorporating new technology, modern tools, techniques and methods.

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