Strategic Issues in Entreprenuerial Ventures - 1565 Words

Chapter 13 STRATEGIC ISSUES IN ENTREPRENEURIAL VENTURES AND SMALL BUSINESSES The Importance of Small-Business and Entrepreneurial Ventures A. Definition of Small-Business Firms and Entrepreneurial Ventures The most commonly accepted definition of a small business firm is one that employs fewer than 500 people and that generates sales of less than $20 million annually. According to the U.S. Small Business Administration, â€Å"A small business is one which is independently owned and operated, and which is not dominant in its field of operation.† Although there is considerable overlap between what is meant by the terms small business and entrepreneurship. The concepts are different. The small-business firm is independently owned and†¦show more content†¦Herb Goldstein, a partner with BDO Seidman, commented that older entrepreneur were more likely to â€Å"manage by the set of their pants.†Of those firms with strategic plan 89% indicated that the plan had been effective. Reasons given for its effectiveness were that it had specific goals (64%), gave staff unified vision (25%), and set up a time frame for achievements (11%). Reasons given for an ineffective strategic plan were that it was too vague (43%), lacked a time frame for goals (29%), did not identify goals (17%), and lacked staff input (11%). Degree of formality Researchers generally conclude that the strategic planning process should be far less formal in small companies than it is in large corporations. Some studies have even found that too formal a process may actually hurt performance. A heavy emphasis on structured, written plans may be dysfunctional to small entrepreneurial firms because it reduces the flexibility that is crucial to their success. The process of strategic planning, not the plan itself, is probably the key to improving business performance. The observations suggest that an entrepreneurial venture begins in Henry Mintsberg’s entrepreneurial mode of strategy formulation (see Chapter 2) and moves toward the planning mode as the company becomes established and the entrepreneur wants its growth to continue. However, if the entrepreneur choose stability over growth, the venture moves toward the adaptive mode common to