Why Post-it note financial planning could spell disaster for SMEs

One in ten UK SME owners have admitted to scribbling down their business plans on a Post-it note, potentially putting their company’s financial survival at risk.


Research from npower Business revealed that some firms use these sorts of projections as their only format of long-term planning.


In many cases the study discovered that the figures were used when a company was first attempting to access finance and were then not updated or looked at again.


This is risky for a business as it means bosses are unaware of the financial situation and may not realise that cash flow issues exist.


A third of hospitality and events firms favoured ‘Post-it note planning’ as did a quarter of logistics and transport SMEs.


The practice was found to be particularly prevalent among fast food chains, bars, cafes and nightclubs, while 15% of Britain’s high street retailers jot down financial plans on Post-its.


Interestingly, 88% of retailers said they believe it’s useful to have a plan in place to encourage growth, yet only half have one in place to support their company as it progresses.


Different planning routes


Four distinct types of financial planning were highlighted by the study, although some methods were more popular than others.


Those companies that user ‘Post-it planning’ were found to be the most disorganised, with the method used by 9% of firms.


‘Mini-planners’ – some 24% of bosses – use plans noted on smartphones, tablets and other technology to develop their finances.


Half of firms meanwhile – referred to as ‘Detail addicts’ – revealed there was fantastic value in having a full-scale plan with all costings clearly laid out.


The last group were named ‘Presentation planners’ and these were individuals who required all details in a clearly organised format prior to commencing business.


Planning is an essential part of forming a successful business and helps to ensure that it maintains a sound financial footing.


This should reduce the likelihood of requiring business recovery measures or other insolvency procedures in the long-term.


How a business chooses to plan will influence its ability to deal with different financial situations as those with a clearer picture should be more capable of finding better solutions.


By Phil Smith


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