Is Informal Planning the Key to the Success of the Inc. 500?
AbstractA review of the research on planning indicated that formal planning might be unnecessary for small, fast-growing companies. Many small, flourishing companies are operating with no written business plan. This study surveyed INC. 500 CEOs to investigate their view on the importance of informal and formal planning practices. The CEOs were asked about the time spent on formal and informal planning for the fundamental business functions (marketing, finance, human resource, operations management, supply chain management, information technology, legal issues, social responsibility, and management). The findings indicated that INC. 500 CEOs spend more time on informal planning than formal planning. When involved in informal planning, CEOs spend significantly more time on management, marketing, operations and finance than the other business functions. When involved in formal planning. CEOs spend significantly more time on the same four business functions as informal planning (though the order is slightly different). The study concludes that both informal and formal planning are vital and necessary for small business success. Knowing when and what to do in both areas of planning is essential.
Allred, A. & Addams, H. (2006). After receiving financing, do INC 500 companies continue to utilize their business plan? Journal of Small Business Strategy, 17 (1), 17-26.
Armstrong, J. (1982). The value of formal planning for strategic decisions: review of empirical research. Strategic Management Journal, (3) 197-211.
Bhide, A. (1994). How entrepreneurs craft strategies that work. Harvard Business Review, 150-161.
Bracker, J., Keats, B., & Pearson, J. (1988). Planning and financial performance among small firms in a growth industry. Strategic Management Journal, 9(6), 591-603.
French, S., Kelly, S., & Harrison, J. (2004). The role of strategic planning in the performance of small, professional service firms. The Journal of Management Development, 25(7/8), 765.
Fulmer, R. & Rue, L. (1974). The practice and profitability of long-range planning. Managerial Planning, 22, 1-7.
Herter,G. (1995). Business planning boosts your chances. Accounting Technology, 11(4), 20-30.
Hormozi, A., Sutton, G., & McMinn, R. (2002). Business plans for new or small businesses: paving the path to success. Management Decision, 40(7/8), 755-764.
Ibrahim, N., Angelidis, J., & Parsa, F. (2004). The status of planning in small businesses. American Business Review, 22(2), 52-61.
Keidel, R. (2005). Strategize on a napkin. Strategy & Leadership, 33(4), 58-59.
Latham, Gary P. & Saari, L. (1979). Importance of supportive relationships in goal setting. Journal of Applied Psychology, 64, 151-156.
Lyles, M., Orris, I., Burdeane, J., & Kuratko, D. (1993). Formalized planning in small business. Journal of Small Business Management, 31(2), 38-50.
Orser, B., Hogarth-Scott, S., & Riding, A. (2000). Performance, firm size, and management problem solving. Journal of Small Business Management, 38(4), 42.
Perry, S. (2001, July). The relationship between written business plans and the failure of small businesses in the U.S. Journal of Small Business Management, 59(3), 201-209.
Robinson, R. & Pearce, J. (1983,). The impact of formalized strategic planning on financial performance in small organizations. Strategic Management Journal, 4, 197-207.
Sanberg, W., Robinson, R., &Pearce, J., II. (2001). One more time ... Should small companies attempt strategic planning? The Entrepreneurial Executive, 46-48.
Schneider, T. (1998). Building a business plan. Journal of Property Management, 63(6), 30-33.
Shrader, C, Chacko, T., Hermann, P., & Mulford., C. (2004). Planning and firm performance: effects of multiple planning activities and technology policy. International Journal of Management & Decision Making, 5(2,3), 171.
Thune, S. & House, R. (1970). Where long-range planning pays off. Business Horizon, 13, 81-87.