1.1 Introduction
The small business strategic plan must communicate the vision and mission of owners to employees and customers. The study will enhance the growth of small businesses in the Nigerian economy through the understanding of the relationship between effective strategic planning and business growth. Small businesses are usually started by a small number of owners or sometimes single owner and usually with no formal procedures and operations. Owners usually manage small businesses with little skills and knowledge to the extent where the growth stage is critical requiring clear vision and mission for success.
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.
1.2 Background of Study
Nigeria's SMEs (general an umbrella term for firms with less than 250 employees), at present experienced a lot of problems and hardship and this is not just as a result of the economic downfall. There are a number of bottlenecks, including serious under capitalization with difficulty in gaining access to bank credits and other financial markets, corruption and a lack of transparency but most damagingly, a seemingly lack of government interest in and support for the roles that SMEs play in national economic development and competitiveness. Looking back, there has never been any real attempt on the part of government to formulate any tangible and lasting policies or programmes to support small business sector what is more damaging, however, is that this lack of support for small businesses have been negatively complemented by misplaced government intervention in what is seen as the commanding heights of the economy.
Historical facts show that prior to the late 19th century, cottage industries controlled the economy of Europe. The industrial revolution changed the status quo and introduced mass production model, which triggered an unexpected reappraisal of the role and importance of small and medium sized enterprise in the global economy. Findings by economics over the years showed that small firms and entrepreneurships play a much more important role in economic growth and development. Many economics developed and developing here come to realize the value of small business. They are seen to be characterized by dynamism, within innovations, efficiency, and their small size allow for faster decision making process.
Governments all over the world have realized the importance of this category of companies and have formulated comprehensive public policies to encourage, support and fund the establishment of SMES. Developments in small and medium enterprises are sin quo non for employment generation, solid entrepreneurial base and encouragement for the use of local raw materials and technology.
SMEs are important for economic development of any nation because they boost commercial activities and growth. The World Bank report (2013), shows that they are a source of employment that lessens inequalities between cities and villages. They provide employment for the teaming idle youth thereby helping in generating income. Small businesses act as a bridge to foster economic growth in both developed and developing countries (Boateng & Abdulrahman, 2013). Small businesses are not only an influential force in the economic development of the country but also reduce poverty in emerging economic (Amin & Banerjee, 2011). SMEs employ local resources which do not involve high technical skills. Some reutilize by-products from other companies as inputs for their own production. SMEs also aid national output by providing raw materials for larger companies. Furthermore, they are also a source of revenue to government through taxation. SMEs further mobilize domestic savings thereby reducing production costs and increasing industrial efficiency.
Therefore, in Nigeria where the research was carried out, the activities that was conducted is to know the Factors Affecting the Performance of Small and Medium Scale Businesses.
1.3 Statement of Problems
This study has observed a problem facing small and medium scale business as a result of the economic downfall, there are a number of bottlenecks, including services under capitalization with difficulty in gaining access to bank credits and other financial markets. Looking back, there has never been any real attempt on the part of government to formulate any tangible and lasting policies or programmes to support small business sectors. This is where strategic planning and control come in place, government has to effectively plan its policies and formulate programmes that will enhance the growth and sustenance of SMEs in the country.
The existing literature fails to establish a concrete relationship between strategic planning and growth of small businesses which indicates a gap in the literature that will help understand the steps of managing the organizational transition of small business growth.
1.4 Aim and Objectives of Study
The aim of the study is to scrutinize the Factors Affecting the Performance of Small and Medium Scale Businesses in Nigeria. In achieving this aim, the following specific objectives were laid out as follows:
- To ascertain the effects of strategic planning as a tool in the growth and survival of Small and Medium Scale Businesses in the Nigeria.
- To measure the contribution of strategy planning in the enhancement of productivity and workers performance.
- To identify the steps and processes that should be taken in implementing strategic planning in an organization.
- To identify the problems militating against the survival of Small and Medium Scale Businesses in the Nigeria and make recommendations on how to solve these problems.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- What roles do strategic planning have to play in the survival of small and medium scale businesses?
- Does strategic planning play any role in the growth and survival of small and medium businesses in the Nigeria?
- Have strategic planning lead to the achievement of corporate objectives?
- Have strategic planning enhances the productivity of small scale businesses?
- What are the problems militating against the survival of SMEs in the country and how can these problems be solved?
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