New research highlights the importance of having a business plan. Over a third of the UK’s SMEs are failing to reach their full profit potential it has been reported.
Shockingly, over a third of SMEs have no business plan at all!
The research commissioned by business and finance software provider Exact, shows SMEs to be consistently more profitable if they have an implemented business plan in place. When taking into consideration the average annual profit made by the 450 SMEs surveyed (£2.8 million), the potential funds which some are missing out on is huge.
The research showed that the top three business goals set out by SMEs were ‘increasing profits’, ‘increasing revenue growth’ and ‘attracting new customers’, and aimed to give a better understanding of what challenges they may face when trying to achieve these, as well as many others.
The research also showed that those with a business plan in place were more than twice as likely to achieve those goals (69%) against those who did not (31%).
Despite these statistics, 34% of SMEs admit to not having a business plan in place, with 68% of those saying they ‘don’t see the need to have one’ and a further 10% saying they ‘didn’t know they needed one’.
This research echoes that previously carried by Pitney Bowes who reported on the shocking figures regarding the cost of wasted effort on marketing in the small and medium size business sector. They highlighted the fact that many SMEs, although having a marketing plan in place, simply did not execute it.
The problem lies in the gap between the planning and the execution, only 39% of marketing that is planned is ever carried out. This is despite the same business owners admitting that their planned activity would increase sales by an average of 9.2%.
Ultimately, once the initial obstacle of creating a plan has been overcome (whether that’s financial or marketing) the next problem identified by business owners is time.
Business owners juggling too many priorities is a classic conundrum that we hear often at Local Business Partners and it’s a shame when the one person who created the business ends up becoming a blockade to it’s growth activities.