A new scientific study conducted in Northern California found the missing link between a company’s size and its financial performance and sustainability.The study by Dr. Dan Geller (2007) found that micro companies — which include startups, entrepreneurs and businesses with 25 or fewer employees — are about half as likely to be engaged in formalized strategic planning as larger companies with up to 500 employees.
Dr. Geller’s study provides a critical connection between numerous scientific studies on the correlation between formalized planning and business success, and the grim reality of small business failure in the U.S. For example, a 1997 study by Berman, Gordon, and Sussman concluded that the practice of formalized planning increases companies’ financial performance and longevity. According to a 2006 report by the US Small Business Administration, 580,400 of the 671,800 businesses that started that year failed, a failure rate of about 87 percent.
Dr. Geller’s study, which surveyed 228 micro businesses in Northern California, found that only 11.4 percent of the surveyed companies reported having a formal strategic planning process in their organization. These findings are significant because they reveal that micro companies have a lower rate of formalized strategic planning (11.40 percent) than larger small-businesses, which according to previous research (Gibson 2002) have a 20 percent incidence of formalized strategic planning.
“The key to increasing the probability of business success and longevity is so simple that one wonders why those that need it the most — micro businesses — don’t embrace formalized strategic planning”, says Dr. Geller. Every entrepreneurs and family businesses should have a simple, short (10 to 15 pages) strategic plan.
One of the main reasons micro companies are less likely to practice formalized strategic planning is that they lack the time and resources to do so, whereas larger companies may have dedicated staff to help with the planning process. To help micro businesses practice formalized planning, even though they have very limited time and resources, Dr. Geller developed the Instant Strategistâ methodology, which allows one to develop a valid and practical strategic plan in less than eight hours. “Clearly,” says Dr. Geller, “even a busy entrepreneur can afford that.”
Dr. Dan Geller is the President of Instant Strategistâ (www.instantstrategist.com); a research company devoted to helping micro businesses succeed through the practice of quick and easy strategic planning. The company offers a range of planning tools, such as a book, software, audio and video CD’s, to help busy entrepreneurs and micro-business owners plan their way to success.
Instant Strategistâ was established in 1998 in San Rafael, CA, and has helped thousands of small businesses develop quick and easy strategic plans. For more information go to www.instantstrategist.com, e-mail info@instantstrategist.com, or call toll free at 866-343-5537.