Business Planning in Small and Medium Enterprises in Botswana

Abstract

Although the relationship between planning and profitability is inconclusive, there is much consensus in the strategic management literature that no firm can survive in todayâ s turbulent and competitive markets without some form of business planning. This paper examines the business planning practices of small and medium enterprises (SMEs) with special reference to the planning processes and contents. Data were collected from 87 SMEs in three cities in the Republic of Botswana through a structured interview. The findings of the study indicated that owner-managers of SMEs are not actively involved in the planning process. Instead they use external consultants and advisors to prepare their business plans, which they use primarily for the purpose of external validation and legitimacy. Although both small and medium sized firms put greater emphasis on operational and short-term survival oriented issues than strategic activities, the study found that there is a positive relationship between firm size and planning practices. As a firm grows in market share or number of employees, owner-managers tend to actively engage in the planning process. The study stresses the critical importance of business planning process rather than business plans in developing strategic thinking and awareness in SMEs. Some suggestions and implications for future research are also discussed.