A quarter of SMEs operate with no business plan
A new survey by the Centre for Economics and Business Research (Cebr) has found that just over a quarter (26%) of small businesses in the UK do not have a business plan.
The study, which was commissioned by Npower Business, found that those SMEs that were operating with the help of a business plan predicted revenue growth almost 2% higher than the national average. This, the study concludes, could mean that businesses without business plans could be missing out on up to £25 billion in potential lost revenue.
More recent research by the Association of Accounting Technicians (AAT) suggests that the number of companies working without a business plan could be even higher amongst micro-businesses – those that employ fewer than 10 people. More than half (58%) of micro-business owners admitted they didn’t have a business plan in place.
Most start-ups that require funding recognise the importance of having a business plan in initial stages when they are looking to secure finance. Simply put, responsible lenders won’t even consider releasing funds without seeing a thorough business plan. This generally applies to the new crop of alternative funding platforms as well.
It isn’t just during the start-up phase when a business might require external funding however. Businesses could require an influx of cash for growth and expansion or just to get through difficult times and a business plan will again be vital in order to secure a loan or other finance solution.
Business plans can also help businesses to steer through the rocky waters of day to day and yearly operations and to avoid the sort of situations that could lead to serious troubles that require business insolvency measures to put right.
No one can predict every possibility or pitfall that can affect a business as the landscape is constantly changing. A good business plan should allow for contingencies however, alongside fair weather or best-case scenarios. As well as helping to secure finance, a business plan can clarify your direction, and help you to identify issues and avoid potential problems in the future.
By Phil Smith