The Role of Business Planning in the Sustainable Development of
Small Business
V. V. Klimova
, A. S. Klimova
and S. V. Chekuldova
Samara state transport university, Samara, Russia
Keywords: Small Business, Business Planning, Business Environment Analysis, Regulation of Entrepreneurship,
Sustainable Development.
Abstract: In this article the problems hindered the development of small business at the present time are highlighted.
The necessity of expanding the practice of planning the activities of entrepreneurial structures at the stage of
their creation and functioning is substantiated. A necessary condition for business communication and a
standard form of information transfer is a business plan that helps an entrepreneur to understand the prospects
and possible problems of production development with optimal results. Some researchers criticize business
planning, citing entrepreneurial intuition, which is more responsive to change than the process of developing
a plan. The authors consider a business plan as a system for the effective use of material and financial
resources, which are limited in small businesses and believe that business planning is mandatory, especially
with new beginnings, identify problems associated with the development of business plans in small businesses.
The process of globalization, the availability of
modern information and telecommunication
technologies, a higher level of education, access to
more markets, lead to the fact that the business
environment is now becoming more dynamic and
unpredictable, it encourages entrepreneurs to
constantly improve their economic literacy. Illiterate
management of business processes, including in the
field of small entrepreneurship, the lack of a
systematic approach give rise to unproductive actions
of participants, reduce the competitiveness of
enterprises, which ultimately affects their ability to
achieve success, both in the short and long term. We
understand that new entrepreneurial structures have
great potential and create innovation (Shane, 2009).
These structures are created when the entrepreneur
and business opportunities meet at a specific time.
One of the main management tools is considered a
business plan, which allows you to formalize the
actions of an entrepreneur in a document that reflects
the main directions of the functioning and
development of a business with a focus on analyzing
demand, profitability and profit. In theory, it allows
you to see future performance and predict
entrepreneurial risks in advance, but in practice, it is
the most important condition for the survival and
development of a business.
Business plans are documents in which founders
present their vision for the future of a venture. In
particular, business plans allow founders to explain
their (Delmar and Shane, 2004).
The need to identify problems in the field of
business planning for small entrepreneurship and its
assessment in management confirms the relevance of
the research topic, and the existing developments of
scientists related to these problems require further
study, which predetermined the need for additional
research aimed at improving economic relations
related to business-planning.
The research methods included analysis and synthesis
of approaches to the essence of business planning and
small business. Methods of synthesis and analysis are
Klimova, V., Klimova, A. and Chekuldova, S.
The Role of Business Planning in the Sustainable Development of Small Business.
DOI: 10.5220/0010587701670171
In Proceedings of the International Scientific and Practical Conference on Sustainable Development of Regional Infrastructure (ISSDRI 2021), pages 167-171
ISBN: 978-989-758-519-7
2021 by SCITEPRESS Science and Technology Publications, Lda. All rights reserved
used to systematize areas of support for small
businesses, inductive and deductive reasoning is used
to determine priorities when creating new business
structures in Russian regions. The method of expert
assessments is used to select indicators for assessing
the development of small business in the regions and
to justify recommendations aimed at their use in the
practice of business planning when creating new
business units in Russian regions. The evolution of
scientific publications is considered using semantic
analysis of approaches to the study of the problem.
One of the continuously implemented tasks aimed at
the development of the domestic economy is to
promote the development of small business. The costs
of overproduction are minimized in this sector of the
economy. The heads of these business units quickly
receive the necessary information about the level of
demand for the goods they produce and in the process
of manufacturing products are guided primarily by
the level of demand from buyers. This allows them to
significantly save, for example, on the costs of
storage and maintenance of goods, the problem of
stocking a warehouse is reduced to zero.
It is easier and cheaper to diversify small
production than large production. In practice, a
number of large enterprises, due to a drop in demand
due to COVID-19, faced difficulties in their work, but
the process of re-profiling activities and even
expanding the assortment group for them is a process
that requires significant expenditures of both
financial resources and time that is especially
valuable in changing working conditions. Small
businesses in these complicated operating conditions
were able to promptly respond to changes in the
market situation, trying to neutralize the
consequences of the crisis.
Small business, in contrast to large, from this
point of view, is more dynamic, it is easier to adapt to
the changes taking place in the economy. Maintaining
the size of the small business sector at a certain level
helps to solve the problem of monopolization and
helps to stabilize the market situation in the country.
These small business units are solving one of the
pressing problems, creating jobs for the local
population and providing additional opportunities for
disadvantaged segments of the population in view of
the diversity of their inherent forms of employment.
This, in turn, helps to reduce social tension in society,
stimulates the development of new technologies,
creates additional opportunities for improving market
The dynamics of the creation of new business
units in small businesses and their number per share
of the population in the regional context in our
country is quite comparable with foreign indicators.
“However, the average volume of added value
produced by one small and medium-sized business
entity is noticeably inferior to the level of developed
countries”, (Report, 2015). At the same time, foreign
partners note that the existing conditions in which
these entrepreneurs have to work do not meet their
expectations, and all this despite the recent
transformations. The real increase in the volume of
small business and the extensive nature of its
development do not correspond to their ideas about
an effective, competitive environment conducive to
the healthy functioning and development of
entrepreneurship. The quality level of its
development does not meet global criteria. Regulators
of small business activities should not only be
developed at the legislative level in order to protect
small business owners from the arbitrariness of local
self-government, but also must ensure equal
conditions for the functioning of all business entities,
regardless of their size and form of ownership.
It is very important to ensure equal opportunities
for entrepreneurs of various forms of ownership.
Klapper et al. Investigated how established rules
affect the entry process of new limited liability firms
(Klapper et al, 2006). As noted in her work
(Chekuldova, 2015), “the availability of resources for
entrepreneurial activity is not the same for everyone”.
In addition to financial entry barriers, entrepreneurs
face a lack of, in their opinion, support from the
regional authorities and the state as a whole. It hinders
the formation and development of their activities and
the fact that there are cases when employees of local
services contribute to the development of unfair
competition. All this not only impedes the effective
attraction of capital on a long-term basis, but also
leads to an increase in economic risks for small
business units, and also undermines the stability of
the current legislation.
It is necessary to develop projects and business
plans related to entrepreneurship to implement
business ideas. A competently drawn up plan shows
the strengths and weaknesses, as well as the
capabilities of the enterprise, which should definitely
interest potential investors who will be able to assess
the economic efficiency and risks of non-return on
investment. That is why business planning plays an
essential role in the development of small business.
Specifically, we suggest that it helps founders make
decisions faster than learning by trial and error:
ISSDRI 2021 - International Scientific and Practical Conference on Sustainable Development of Regional Infrastructure
manage supply and demand of resources in a way that
minimizes labor-intensive bottlenecks and more
effectively translates abstract goals into concrete
design actions.
Compitent business plan makes it possible to
determine the required amount of all resources as
accurately as possible even before the start of
activities, before the start of production. This step
allows you to make a reasoned offer to potential
investors, to demonstrate them the possible
advantages, conditions and expected return on
investment. A business plan is not only a document
that substantiates the possibility of realizing an idea,
but also a tool for analyzing the expected place in the
market and ways of promoting, predicting problems
and ways to eliminate them, specifying investments
and sales, as well as calculating performance
indicators. The main purpose of a business plan is to
confirm that the project will make a profit, it is real,
the investment will pay off, it must take into account
the needs of the market and the availability of limited
resources. The business value of enterprise resource
planning costs has been confirmed in a publication by
M. Ghobakhloo (2019).
As a result of the research, it was revealed that a
business plan should be considered as a document
containing a rationale for the attractiveness of a
project or its stages. For small businesses, such a
rational element as business planning helps to assess
the level of attainability of the stated goals; determine
promising areas of activity and your target audience;
commensurate the estimated amount of financial
costs for the implementation of your idea and the
expected results; to investigate possible risks and
difficulties, to assess the degree of their influence on
the chosen type of entrepreneurial activity.
Analysis of some scientific publications has shown
that business planning is not very helpful when the
conditions that accompany the process of starting a
new enterprise are not very clear. For example, a
number of entrepreneurs believe that the acquisition
of fixed assets at the initial stage is a more significant
process than planning their activities. They believe
that the purchase of the premises indicates a
seriousness of their intentions and that this is enough
to start a business (Carter et al, 1996).
Allinson says in his work that in this situation, the
real entrepreneur is distinguished not just by
intention, but by an intention that has been realized,
which has led to an entrepreneurial result. (Allinson
et al, 2000).
According to Bird, the uncertainty and speed of
the pace of business situations undermines the value
of business planning (Bird, 1988).
We believe that the approach justified by these
authors contradicts the foundations of the theory of
organization. And, according to (Locke, 1980), the
active use of planning before starting decisions can
significantly improve the quality of the expected
results. Business planning, in our opinion,
undoubtedly contributes to the formation of the
initially created business units in the economy.
Planning is an essential precursor to initiating action
because it maintains the structure in which
subsequent endeavors are carried out (Mintzberg,
In our opinion, a business plan is not only a tool
for effectively substantiating the use of a given size
of material and financial resources, but also one of the
ways of their development, taking into account the
interests of entrepreneurs, the interests of regions and
the country as a whole. After all, it is known that at
all times in small business one of the first problems is
the lack of resources (Scott, 1987) and increased
risks. At the same time, researchers emphasize that
financial resources are the most significant for these
entities (Lopez et al, 2012). A limiting factor is the
fact that a combination of professions is characteristic
of small business at the stage of its creation and initial
operation. At this point, people with universal
knowledge and skills are needed (Gilbert et al, 2006).
This shortage of qualified specialists in the early
stages of creating a new business unit stems from the
limited financial resources allocated, among other
things, to wages. In addition, entrepreneurs lack
professional training in creating a business plan, and
foreign standards for writing it are not focused on
Russian business.
Аgnes Bogath (Bogаth, 2017) thinks: The
possibility of exploiting favorable credit programs
largely depends on whether the company is able to
provide adequate quality business plan attached to the
loan applications. We believe that the direction of
application of this provision is small business and this
approach is very important, but it is necessary to use
certain methods.
There are also difficulties in attracting capital,
when developing a small business, Investors are not
always ready to cooperate with this sector, as the
expected return does not always correspond to their
expectations. The situation is complicated for
entrepreneurs and the inevitable increase in the cost
of financial resources. At the state level, programs
aimed at the development of small business in the
regions are constantly being updated. But in this
The Role of Business Planning in the Sustainable Development of Small Business
situation, it is much more important to pay attention
to the timely and targeted organization of subventions
and subsidies to regional entrepreneurs. As practice
shows, the financial burden on these market entities
remains high. As a result, the pace of development of
this sector of the economy does not correspond to the
expectations of the authorities. The state, for its part,
regularly proposes comprehensive measures aimed at
reducing the administrative costs of small businesses.
Nevertheless, the level of transaction costs for many
entrepreneurs remains not only high, but also not a
feasible obstacle when entering the market. “The
development of measures aimed at removing
obstacles to doing business is presented not as one of
the stages of a small business development program,
but as an end result” (Chekuldova, 2015). The
construction of support mechanisms on this principle,
unfortunately, is becoming regular and, therefore,
inhibits the growth of entrepreneurial initiative,
which, in its turn, would contribute to the
achievement of the economic and social tasks of the
In addition, small businesses inevitably face
market fluctuations. Currently, the situation is
complicated by a decrease in the purchasing power of
the population, which arose against the background
of rising unemployment and a fall in the level of real
incomes of the population in the context of restrictive
measures for the functioning of business entities due
to Covid-19.
Conditions dictated by larger entrepreneurs and
regional authorities, dishonesty on the part of local
government officials, a high degree of corruption -
factors that the state seeks to reduce to zero -
nevertheless, are encountered in the path of small
business owners today. It is necessary not only to
create preferential programs, but also to pay attention
to the quality of the support provided. “It is necessary
to build relationships in such a way that each small
business entity is interested not only in receiving
income, but also in meeting the social needs of its
employees, and can also freely engage in the
development of its activities, without fear of legal
delays and be confident in efficiency and
effectiveness. mechanisms and instruments that
regulate the activities of the relevant area”
(Chekuldova, 2015).
In these conditions, it is necessary to
systematically analyze the situation in the
development of small business. At the same time, it is
necessary not only to identify problem areas, which is
undoubtedly important, but also to look for promising
directions, to create favorable conditions for its
development. As an element of strategic
management, the analysis of the business
environment involves finding a balance between the
micro and macro environment of a business unit. The
most important thing in this process is to track
changes in the economy and focus on factors that can
affect not only the formation of the activity of a small
business entity, but also the possibilities of its further
functioning and development.
If the external environment at the macro level
most fully meets the needs of small businesses, then
we can talk about the presence of a favorable regime
that promotes the development of their activities.
However, the formation of such conditions at the
regional level of a particular entity is impossible in
the absence of these conditions in general throughout
the country. In the event of negative changes in the
economy and unfavorable conditions, entrepreneurs
begin to take a wait-and-see attitude, i.e. in fact, they
put their activities on pause in anticipation of a
favorable climate.
Thus, the ongoing economic transformations
affecting small business do not rid it of the existing
obstacles generated by both the general problems of
the national economy and those arising in the process
of direct reform, which, paradoxically, is designed to
improve the situation. Lack of clarity and clarity,
vague formulations of the fundamental goals in small
business support programs developed at the highest
levels of government, only complicate the situation.
In this regard, it is necessary to shift the focus and pay
attention to the development of strategic thinking,
which contributes to the prioritization of business
entities, drawing up an action plan for various
scenarios of market behavior and developing an
appropriate line of behavior.
In modern conditions of small business development,
it is advisable to systematically, comprehensively
improve the quality and efficiency of work. The
priority area should be a strategic approach to
planning their activities, for which it is necessary to
be able to develop a competent business plan. A
business plan in its essence is a legal document that
represents a program of formation and lays down a
vector for the further development of entrepreneurial
activity. Moreover, it is a reasoned need to attract a
given amount of resources, confirming the benefits of
this activity. The authors believe that in addition, this
document is a source of strategic information and an
effective tool for managing the impact on the future
of the enterprise, revealing potential opportunities
ISSDRI 2021 - International Scientific and Practical Conference on Sustainable Development of Regional Infrastructure
and containing ways to achieve profitability of the
In the process of work, the authors identified a
number of existing problems in the development of a
business plan for small businesses in the regions:
Limited access to external sources of
information and lack of skills to work with
Difficulties in setting goals and building tasks,
syntactic difficulties in the process of
formulating them, as well as in assessing their
Unsatisfactory study of the prepared action
plans and their justification;
Inadequate assessment of the importance of
business planning on the part of staff;
Insufficient responsibility and lack of
motivation on the part of managers for the
preparation and implementation of individual
sections of the business plan;
Lack of due attention to the analysis of the
provided results and the preparation of the
necessary regulatory documentation;
Lack of professionally trained specialists in
small business with the skills to create a
business plan;
Foreign standards for developing a business
plan are not focused on Russian business, and
there is no own uniform methodology.
In the course of the research, the following
conclusions were made: the methods of business
planning used in practical activities by small business
entities will make it possible to competently build and
systematize the decision-making process, since the
technology of business planning itself is based on the
principle of finding an optimal management decision
based on currently existing time parameters of the
business environment and taking into account the
internal potential of the enterprise itself. An
entrepreneur needs to remember the above-described
features of planning in a small business and the
presence of restrictions. It is important that the
developed strategy provides an opportunity for
effective implementation of activities, thereby
positively influencing the socio-economic
development of the country as a whole. Thus,
business planning allows an entrepreneur to rationally
assess the possible consequences of various kinds of
threats - technical and technological, financial,
personnel - that can adversely affect his activities, and
at the same time contributes to the activation of
entrepreneurial start in general.
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The Role of Business Planning in the Sustainable Development of Small Business