SMES with business plans are nearly 20% more likely to be profitable than those without, according to new independent research commissioned by software provider Exact. The findings show that 70% of small and medium-sized businesses with plans in place are profitable compared to 52% of those opting to wing it instead.
Business plans can help identify long-term objectives, forecast how long it will take to achieve goals and allow for progress checks along the way to see if everything is on track. After analysing the finding s of the report, designed to explore and better understand the challenges smaller businesses face in achieving their goals, Exact believes up to third of the UK’s 4.8 million SMEs are not reaching their full potential.
Among the results, a total of 34% of SMEs are cited as not having a business plan, with 68% of these believing they do not need one and 10% reporting they did not realise how important this was. Reasons mentioned for not having plans included being too busy (23%), not having anyone to help (8%) and not being comfortable with numbers (5%).
Is this a wake-up call?
Lucy Fox, General Manager of UK Cloud Solutions for Exact, thinks many SMEs are missing out on the added value a business plan can offer.
She said: “While the results should serve as a bit of a wake-up call, they also highlight that more needs to be done to address some of the misconceptions over what is involved in the planning process.
“Many don’t seem to realize that with the help of a trusted financial advisor, like an accountant, creating a plan can be done easily and the benefits can be enormous.”
Achieving business goals
The top three business objectives identified in the research were increasing profits, increasing revenue growth and attracting new customers. Those with business plans were shown to be more than twice as successful in achieving these goals (69%) than those without one (31%).
Do you have a business plan in place? Do you think this is an essential part in reaching your goals? let us know @thebusinessoctopus