One in four small businesses 'lack growth strategy'

Friday 30 January 2015

When setting up a business or limited company, it pays to have a good business plan in place. However, some fail to do this.

New research from Barclays shows that close to one in four (23 per cent) small businesses do not have a business plan or growth strategy in place. Only 47 per cent of respondents have a formal business plan that has either been written down or recorded in some way. The remaining 25 per cent of respondents have a business plan but it is only informal or verbal. What's more, a further 49 per cent of UK small businesses do not have a succession plan in place.

Barclays found that the older a business is, the more likely it is to have a formal business plan. Two thirds of businesses that were established more than 35 years ago have a business plan, while only 35 per cent of businesses aged between six and ten years do and 44 per cent of those aged less than five years have a solid business plan.

Managing director for business lending and enterprise at Barclays, Rebecca McNeil said: "Having a business plan is fundamental for a small business. It defines exactly what you want to achieve, how you plan to achieve it across a set time period and is a sure fire way to ensure that growth targets and plans are being met. Business plans are dynamic documents - meaning they should be revisited and adjusted as the business develops. In addition, a strong plan can help applications for finance from a business loan to alternative forms of finance and investment."

She added that having a solid plan is important when a business is in trouble as it can help to put it back on top. Additionally, not having a succession plan can be problematic for a business as it can put the future of the firm at risk. Ms McNeil suggested that this plan should be considered formally and much earlier than the results show that business seem to be doing.

Furthermore, Ms McNeil said: "What’s important is that small businesses feel confident about their future and have the necessary tools in place for growth."

As well as questioning businesses on their plans, Barclays also asked small businesses about the factors that helped them to get significant revenue growth.

The points that were considered to make the biggest impact were enhancing or improving existing products or services or entering a new market, with these points getting 26 per cent each. After that, launching a new product or service was voted for as one of the most impactful ways of gaining revenue, with 24 per cent stating this, followed by hiring new staff with 20 per cent.

Making up the rest of the top ten were buying new or improved equipment according to 13 per cent; 12 per cent said finding new suppliers, another 12 per cent said they launched a new website, ten per cent reduced the cost of debt and ten per cent obtained new funding.

By Victoria McDonnell

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