Effect of Strategic Planning on the Performance of Small and Medium Enterprises in Kenya: A Summary Review of the Literature
The Kenyan Small and Medium Enterprises (SMEs) sector is a very competitive environment, and they need strategic planning to remain competitive. Kenyan SMEs, which include agriculture and rural businesses, have contributed greatly to the growth of the economy, mainly in the creation of employment. Yet there have been high failure rates and poor performance levels. Many are faced with the threat of failure within the first few months. Many SMEs perform well after start up, but only a few experience sustained growth through the full lifecycle and become large firms. Lack of strategic planning may prevent them from achieving their potential, or even surviving. There is very little evidence however indicating whether SMEs in Kenya engage in strategic planning, and if they do how it impacts on their general performance. This study endeavours, through a literature review, to find out how strategic planning impacts their performance. The study established that the most successful businesses use strategic planning, and there is a high failure rate for those who do not. The recommendation is that the owner or entrepreneurs of the SME to be trained in the skills of strategic planning. Key words: SMEs, strategic planning, Performance.