Strategic Planning in the Small Business

Unit 6

HO 6-5 (Continued)

As a company

grows in size and complexity, the need for strategic attention becomes

even more important. Typically, working boards help establish long-range policies.

Owner/managers

too often confuse long-term strategy with short-term tactics -and the

loser, almost

automatically, is strategy. The board's job is to make sure that strategy gets the

attention it deserves.

The traditional

respcnsibilities of boards are usually broken down into five broad

categories:

" Review

and authorize corporate and financial strategy,

" Establish policies and plans to implement

strategies,

* Form and maintain the management team,

* Creatu

good corporate controls,

* Review

and approve employee and community relations.

What does a private

business need an outside board?

Not every business needs an outside board.

In the early years, most owner/managers get along just fine

without outside directors.

In fact, most business founders would probably

agree that in those "irteresting" early days,

outsiders would have just gummed

up the works, tripped up decision-making, and generally

slowed things down.

Few start-up entrepreneurs have a need for anything

other than cash, customers, energy,

and more cash. The owner/manager supplies the brains.

But if the

functions that a board normally provides are needed by a company and its

shareholders, then a board is probably needed.

I think that a business needs

to meet the following conditions before it is ready for a

board:

The company should be successful. This doesn't

mean that the company must be vastly

profitable, nor even that it must be

currently profitable. What it does mean is that a company

is only ready for an outside board once it is an established,

going concern with reasonable

expectations of making it in the future.

The start-up business

has one primary objective -survival. There is usually no time, no

energy, nor even any willingness to listen to the suggestions and

ideas of outsiders. Survival

problems are immediate problems, problems of tactics rather than strategy,

and a board of

directors is not generallydesigned to deal with tactics.

Survival

is not a problem confined only to start-up businesses, however. Sometimes

going concerns find ihemselves in serious trouble due to changes in management,
markets,

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