Using a sample of Small to medium size enterprises (SME’s) in the London area, this study investigates the extent to which SME’s make effective use of strategic planning and its impact on organisational performance. This study will examine the extent to which strategic planning is prevalent in small firms, the content of strategic plans and the planning techniques used. The study will seek to determine whether a relationship exists between strategic planning and organisational performance. Other hypotheses will test whether relationships exist between various aspects of strategic planning such as frequency of meetings, formality of strategic plans, how strategic plans are monitored and organisational performance. Multiple measures such as the achievement of organisational objectives and organisational performance based on industry average are used to measure whether such relationships exist relationship.

While no significant relationship emerges between the performance measures and the use of strategic planning, other relationships between the various variables emerge. The findings of this research contradict the findings of previous researchers who have made positive links between the effective use of strategic planning and improved organisational performance. Despite evidence of increased strategic planning amongst SME’s the study illustrates that the planning behaviour of these firms is significantly informal. Evidence suggests that micro small firms are more likely to engage in less formal planning procedures.