David Stokes
Nicholas Wilson
Small Business Management and Entrepreneurship
Fifth Edition
Lecture outline
 Successful small business strategies
 What is a strategy?
 New venture strategy
 Survival strategy
 Growth strategy
 A composite model
Strategy
 Strategy can be described as either being a plan,
pattern, perspective that brings together an
organization’s major objectives, policies, and activities
into a cohesive whole.
 Objectives represent what is to be achieved
 Policies are rules or guidelines with define limits
 Activities are detailed actions necessary to achieve
objectives
Deliberate strategy
 Strategy may be formulated as a deliberate plan of
stated, or unstated, intensions. Some entrepreneurs
produce a business plan before startup, which sets out
their intended course of action
Emergent strategy
 Some strategies are not conceived in advance but
emerge as a consistent pattern during the course of
events.
 Marketing approaches which are often on a reactive
basis until a pattern emerges
 Management strategies, especially those involving
people, often emerge as unplanned reactions to factors
previously unknown.
Realized strategy
 Strategies which are usually a mixture of deliberate
and emergent strategies.
New venture strategy
 Entrepreneurs and small business founders face
several problems when starting a new venture most
important being the shortage of resources. This forces
the founder to exploit a particular strategy which has
been termed asset parsimony. The so called
“parsimonious path to profit” can be categorized in the
following ways:
 Never buy new what can be bought second hand
 Never buy what can be rented
 Never rent what can be borrowed
 Never borrow what can be begged
 Never borrow what can be salvaged
 Opportunity recognition
 Competitive advantage or profitability
Survival strategy
 Critical factors in closure of small businesses
 Insufficient turnover
 Poor management and supervision
 Lack of proper accounting
 Competition
 Not enough capital
 Bad debts
 Excessive remuneration to the owners
 We can also categorize the causes in terms of:
 External influences
 Internal factors
Management, marketing and
money
 Factors which are controllable by the owner-manager
 Management – concerned with the effective and
efficient use of resources
 Marketing – represents relationship of the enterprise
with the customers
 Money – enables the whole system to work
Strategies beyond survival
 The strategies will depend on the objectives of the
enterprise.
 Motives can point to one strategy which is opposed by
money or management
 Management considerations may indicate a strategy
which is opposed by the motives of the owner
 Marketing strategies may run counter to motives
 Money influences may be diminished by personal
motives.