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What Is Strategic Planning and Why Is It Important for SMEs?

Small and medium-sized enterprises (SMEs) encounter numerous obstacles in strategic planning. of the limitation of time, expertise, and resources, often lead SMEs to focus on immediate concerns, setting aside their long-term plans.

This is unfortunate, considering that strategic planning is a key determinant of business success. Keep reading to learn about the significance of strategic planning and why it is essential for SMEs today.


What is strategic planning?

At its core, strategy is about where the organisation wants to go and how it can get there.

Strategic planning refers to the ongoing process of documenting the business’ intended direction. It requires articulating the SME’s purpose, desired results, and key performance indicators (KPIs).


Increase organisational alignment

A well-crafted strategic plan ensures alignment across the entire organisation. Shared understanding of the business’ direction encourages individuals to allocate resources effectively, preventing wasted opportunities misaligned with the organisation’s long-term objectives.


Instil a sense of accountability in employees

Strategic planning should engage employees on all levels, allowing them to exchange ideas, understand the SME’s strategic objectives, and recognise their role in the broader context—this ensures that everyone feels valued, heard, and essential.

Engaging everyone in the strategic planning process empower employees to feel a sense of responsibility and engagement. This can have a significant impact on your business’ productivity andsuccess.


Transparency about the organisation’s direction

A strategic plan provides a clear outline of the organisation’s direction and objectives. This clarity benefits employees with a defined goals, and also external parties, such as investors and other stakeholders.

Therefore, a strategic plan is critical in building trust, eliminating ambiguity, and instilling confidence in others, making the organisation more attractive for investment and support.


Track progress

During the strategic planning process, KPIs and benchmarks for success are established to easily evaluate the organisation’s progress over time. This determines if the SME is on track to accomplish its goals and if any adjustments should be made to facilitate the process.


Proactivity over reactivity

Strategic planning place the SME in a proactive position. Through market research and the assessment of the challenges and opportunities, the organisation can better anticipate potential unfavourable scenarios and take steps to prevent them from happening. This approach ensures there is always contingency plans in place.

Moreover, proactivity gives the organisation a competitive advantage by staying one step ahead of the industry trends and being in a position to making strategic moves.



Strategic planning plays a significant role in helping SMEs succeed. For instance,, it facilitates efficient resource allocation and gives the organisation a competitive edge, enabling it to operate with enhanced efficiency and effectiveness. Hence, the recommendation for SMEs is to formulate a strategic plan for long-term success.

For those seeking support in strategic planning, LiT Strategy stands ready for assistance. Positioned as a business consultancy firm in Singapore, LiT Strategy offers top-notch strategy consulting services, including expertise in EDG grant consultant and PSG Job Redesign advisory services. Feel free to explore our services for strategic guidance and consultation.