Research from Exact shows SMEs with a business plan make a more consistent profit than those without
"If you fail to plan, you are planning to fail." The words of Benjamin Franklin certainly resonate strongly with Britain's SMEs. That's if research commissioned by Exact, the business and finance software provider, is anything to go by. It reveals that 70% of SMEs that have a formal business plan in place last year were consistently more profitable than those that didn't (52%).
The independent research - carried out to provide a better understanding of some of the challenges faced in achieving business goals - showed that, when put into the context of the £2.8m average annual profit made by those with a plan, those with no strategy in place risk missing out on a nice little nest egg.
The results highlighted SME's top three goals as increasing profits; increasing revenue growth; and attracting new customers.
The fact that those companies with firm business plans produced a 69% success rate - compared to the meagre 31% for those without one - is hardly a revelation.
Perhaps more surprising was the admission from over two thirds (68%) of the 34% of SMEs with no business plan that they didn't have one because they didn't see the need to. And if that wasn't shocking enough, 10% of those surveyed said they didn't even know they needed one.
“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," said Lucy Fox, general manager of UK cloud solutions for Exact.
"Many don’t seem to realise 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.”
It doesn't stop there, however. Exact also revealed that 23% of those without a business plan were simply 'too busy', 8% didn't have anyone to help them and 5% were not comfortable with numbers.
Howard Jackson, managing director of FD Solutions, added: “The fact that so many SMEs do not appear to have a plan is worrying, not least in light of the fact that much of the UK economy depends on their success, representing over 99% of all private sector businesses.
“As the green shoots of recovery grow, there are real opportunities for SMEs to be at the forefront of that trend and to benefit from that growth. Having a business plan in place to address opportunities, as well as some of the challenges, is a great place to start."
He was a wise man, that Benjamin Franklin.