Two in five do not have any succession plan
Despite being recognised as an essential tool in supporting business growth, 23% of small businesses have no business plan in place according to new research by Barclays.
The research revealed just 47% have a formal, written or recorded business plan, while the remaining 25% have only a verbal plan in place. The importance of a business plan seems to have diminished for newer businesses – with 66% of businesses established more than 35 years ago having one, in comparison with 35% between six and 10 years and 44% five years and younger. Furthermore, only 49% of UK small businesses have any kind of succession plan in place.
By region 52% of businesses in the South and East were most likely to have a formal business plan, while just 38% of those in the midlands did. Additionally, the research found that small businesses check financial forecasts for the year ahead and cash flow budget analysis every four weeks, marketing and business development plans every five, but staff benefits and staff contracts only every 11 weeks of the year.
The study also asked small businesses what factors they thought had the biggest impact on revenue growth in their strongest years. The two most likely responses were enhancing or improving existing products or services and entering a new market, sharing 26% of the vote. This was followed closely by launching a new product or service (24%) and hiring new staff (20%). At 13% the fifth biggest factor was buying new or improving equipment, followed by finding new suppliers, opening new premises, or launching a new website (12%). The final two responses were financial, citing reducing the cost of debt and obtaining new funding at 10%.
These results highlight the importance of progression and change for any business to continue to generate revenue.
Managing director for business lending and enterprise at Barclays, Rebecca McNeil, commented:
“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.”
“Importantly, when a business is in trouble, having a solid plan can help to steer it back to good health. A lack of succession plan can put the future success of a business at risk, so this needs to be considered far earlier and more formally than the results show. What’s important is that small businesses feel confident about their future and have the necessary tools in place for growth.”