Strategic Planning in Small Family Businesses
There is no doubt that family businesses contribute significantly to the economic growth of any society today. In the United States, around 80% of all businesses are family-owned, generating 50% of the country’s annual GDP (Lank, 2000). Similarly, family businesses constitute as much as 70% of all UK businesses employing 50% of the country’s workforce (Institute for Small Business Affairs, 1999). However, not all family businesses are large; the majority of them are small and medium sized. This paper looks at small family businesses and tries to understand how they plan their activities for the purpose of their development. The author also attempts to find out to what extent the businesses utilise formal strategic planning techniques.
There are many definitions of a small business. Most of them use the size of the business, as indicated by either asset value or turnover, or, more commonly, by employment. However, different authors give different figures, even in terms of the number of employees. The number ranges from 50 to 500 (Bridge et al, 1998; Hodgetts, 1982; Tomkins, 2001). Hodgetts (1982) outlines small businesses as follows: - manufacturing firms tend to have 250 or fewer employees; - wholesaling: $5 to $15 million in annual sales, depending on the industry; - retailing and service: $1 to $5 million in annual sales, depending on the industry.
At the same time, ‘small’ is a relative term, and what is relatively small in one industry may be quite large in another (Bridge et al, 1998).
Similarly, different scholars give varying definitions of a family business. Thus Bridge et al (1998) suggests that a family business refers to any business owned primarily by members of the family, who ‘operate it for the present and future benefit of at least some members of that family’. Vinton (2004), however, does not mention any economic paradigm but instead focuses on the issue of succession as the primary determinant of a family business. She
There are many definitions of a small business. Most of them use the size of the business, as indicated by either asset value or turnover, or, more commonly, by employment. However, different authors give different figures, even in terms of the number of employees. The number ranges from 50 to 500 (Bridge et al, 1998; Hodgetts, 1982; Tomkins, 2001). Hodgetts (1982) outlines small businesses as follows: - manufacturing firms tend to have 250 or fewer employees; - wholesaling: $5 to $15 million in annual sales, depending on the industry; - retailing and service: $1 to $5 million in annual sales, depending on the industry.
At the same time, ‘small’ is a relative term, and what is relatively small in one industry may be quite large in another (Bridge et al, 1998).
Similarly, different scholars give varying definitions of a family business. Thus Bridge et al (1998) suggests that a family business refers to any business owned primarily by members of the family, who ‘operate it for the present and future benefit of at least some members of that family’. Vinton (2004), however, does not mention any economic paradigm but instead focuses on the issue of succession as the primary determinant of a family business. She
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