Ineffective planning could mean Britain’s small businesses will lose out on £25 billion in extra revenue in 2016, according to new research.
More than a quarter (26 per cent) of UK SMEs surveyed say they do not have a business plan in place and are therefore likely to be operating without basic objectives, revenue targets or a plan to manage cash flow.
However, research by the Centre for Economics and Business Research (Cebr), commissioned by npower Business, reveals that over half (51 per cent) of the UK’s best performing SMEs are working to a detailed business plan.
Planning for success
Among all SMEs with a detailed plan, 70 per cent anticipate an increase in their expected 2016 revenue growth as a direct result of developing and implementing their current business plan.
Cebr’s analysis finds that SMEs, which are effective business planners also expect to see revenue growth of 8.2 per cent in 2016.
This is 1.6% higher than revenue growth expected by the average SME in 2016 – which equates to a potential increase in revenue of £25 billion above what is currently expected.
Even for the smallest businesses, the increase in revenue from more effective business planning could equate to thousands of pounds per year, but for bigger SMEs that increase has the potential to run into the millions.
Direct link between planning and profit
Laura Holdgate, senior economist at Cebr, said: “The research suggests that more effective business planning among the UK’s SMEs is directly linked to better business performance. SMEs have the potential to experience higher turnover growth as a result of more effective business planning, in turn boosting UK plc.”
Phil Scholes, head of npower Business, said: “Effective planning is essential for small businesses who are the backbone of the UK economy.
“Being in better control of their finances and the risks and opportunities facing their business enables them to make better, more effective decisions.
“npower works with a quarter of a million small businesses across the UK and we want to help with this planning by making energy a fixed cost within their businesses or by helping them save energy and gain greater insights into their energy use via free smart meters.”