The effects of strategic planning on the performance of small and medium enterprises (SMEs) in the Cape Metropole

Abstract

The research investigates the effect of strategic planning on the performance of SMEs. The research was motivated by the well-documented high failure rate of Small Medium Enterprises(SMEs) in South Africa as well as the lack of literature on strategic planning at South African SMEs. Data were collected from SMEs through interviews and questionnaires. The research study employed an exploratory research design and a mixed method which included quantitative and qualitative research approaches, through the use of questionnaires and interviews. According to the findings of the study SMEs attempt to use strategic planning to a limited extent. Strategic planning is not well documented but rather unstructured and intuitive at most SMEs. Furthermore, the findings of the study indicate that SMEs do not always incorporate strategic planning in their day-to-day business operations but use it to look good or to follow a trend. The results of the study also indicate that high business performance is found in SMEs that employ strategic planning. Concerning the factors that possibly inhibit SMEs in the City of Cape Town from making use of strategic planning, the findings suggest that the main inhibiting factors for decision-making are based on assumptions, intuitions, or experiences. The findings of this study provide invaluable insights into the effects of strategic planning in SMEs, which could be used as a basis for further research on strategic planning in South Africa. The decision-makers of SMEs may use the findings of this study to determine the benefits of strategic planning at SMEs. The findings of the study may further be used for future endeavours of the government when setting up interventions to support and increase the chance of SMEs’ survival in South Africa.