This paper investigates the relationship between Strategic planning process and financial performance of professional service SMEs in Kenya. Specifically, the study had two specific objectives of the study: first, to analyze the effect of strategic planning process on the financial performance of professional service SMEs in Kenya and secondly, to test the moderating effect of innovation practices on the relationship between strategic planning process and financial performance of professional service SMEs in Kenya. The study targeted 384 SMEs as the sample size, with data collected from managers/owners through questionnaire. SMEs were randomly selected while respondents were selected through purposive sampling. The study findings indicated that innovation practices have a moderating effect on the relationship between strategic planning process and the financial performance of professional service SMEs in Kenya. From the findings, it can be concluded that SMEs with strategic planning practices and innovative practices are likely to have better performance than SMEs that have adopted strategic planning process only.
Keywords: Environmental Scanning, Innovation Practices, Small Medium Enterprises, Strategic Management, Strategy Evaluation, Strategy Formulation, Strategy Implementation
