Micro businesses are missing out on the growth opportunities that other small to medium-sized (SME) businesses are leveraging—the development of a business plan.
An increasing number of SME owners realise the value of a business plan in achieving their business goals. The modern business plan is very much about setting out the strategic goals of the business and how to get there.
However, according to the latest findings of RSM Bird Cameron’s thinkBIG 2014 study, there is a clear difference in the type of SME that develops a plan:
- smaller SMEs are significantly less likely to undertake formal business planning. Sixty three percent in businesses with 3 to 5 employees complete a business plan; this drops to 60 percent in businesses with 1 to 2 employees and only 40 percent in sole ownerships.
- in businesses with 50 to 99 employees, 95 percent prepare a business plan. These businesses are also much more likely to complete a plan on a yearly basis, with 77 percent reporting that they do so.
Andrew Graham, national head of business solutions, RSM Bird Cameron, said, “A good business plan can set a clear path towards growth that many smaller businesses are not taking. Regularly updating the plan is an important factor in growth.
“Business planning remains a key tool for SME owners. Many industries continue to face scrutiny from various authorities and financial institutions. Having a solid business plan is critical in meeting financing requirements. This means that SME owners need to spend more time developing business plans and creating debt management strategies.”
The study found that overall, 67 percent of business owners say they complete a business plan; 49 percent prepare one annually, up slightly from 42 per cent in 2013.
Graham said “Half of all SMEs surveyed do not have a disciplined approach to developing and updating their business plan. RSM Bird Cameron’s experience indicates that this reflects on the financial performance of the businesses, with those that plan outperforming those that don’t.
“SMEs that have made the important step of growing to employ more than 50 staff seem to have a more disciplined focus on business planning.”
thinkBIG has measured the pulse of the Australian SME sector for nine years. It benchmarks business growth and profitability, business planning, exit planning, and superannuation. Over 50 business owners participated in the 2014 study, providing insights into how Australian SMEs feel about their business.